During the boom times, financing a project like the Alico Family Golf Center would have been a gimme.
But the driving range and miniature golf project in south Lee County was conceived in the recession, and its birth was difficult.
The two PGA professionals who came up with the idea broke ground on the project last month, suggesting that such developments could get new life as the economic recovery continues.
Still, the tortuous way the deal came together illustrates how difficult it remains for entrepreneurs to find and obtain financing for any project that doesn't fit the normal parameters in Southwest Florida.
“I was shocked,” says Jack Feighery Jr., an investor in the golf center, a bank director and president of KAF Manufacturing Company in Stamford, Conn. “I could put the project together in 60 days up here.”
While the economy is recovering broadly, Florida has retained its toxic reputation for failed projects. For example, everyone in the Fort Myers area remembers the saga of Zoomers, an amusement park that failed and was taken over by a local bank. Although that park opened recently under new management, it was a high-profile foreclosure because its abandoned amusement rides were visible on Summerlin Road for years.
“We tried at least eight banks and got no, no, no,” says Jim St. Germain, who owns the Alico Family Golf Center with business partner Kraig Feighery, Jack Feighery's son. Both St. Germain and the younger Feighery are the PGA professionals who will operate the center.
St. Germain and Feighery encountered one obstacle after another. They had to reduce the scale of the project and ask investors to personally guarantee loans, prompting one of them to pull out of the deal. But St. Germain, 66, had put his life savings into the project and he wasn't about to let it fade away. “I never felt I wasn't going to do it,” he says. “I found the right people.”
At the heart of the project is a land deal that looks like a bargain compared with boom-time prices. Alico Family Golf Center bought 30 acres on Lee Road near the intersection with Alico Road and Interstate 75 for $1.25 million this summer. The previous owner paid $13.9 million.
Originally, like much of the land around it, the area was zoned for a bonanza of industrial uses. The previous owner had planned to create 30 one-acre parcels that he intended to sell for $1 million apiece. But just as industrial buildings were starting to mushroom on Alico Road during the boom, the bust ensued.
St. Germain had scouted the land and saw a sign it was for sale. For years, St. Germain had wanted to open a golf driving range, but land prices had become unaffordable. “It was hard to do because of the price of land,” he says. “You can't pay $7 million for a piece of land.”
St. Germain should know. He's operated driving ranges, including one at the busy intersection of Daniels and Six Mile Cypress parkways in Fort Myers. “I've been talking about this for years,” he says.
In March 2012, St. Germain made an offer on the Lee Road property with a $20,000 deposit. He had raised $400,000, but discovered that wouldn't be enough for the project he envisioned.
Little would St. Germain know that it would take a lot longer to close on the land than he expected because he'd have to raise $1 million. “I had 90 days to close,” he says. But the project took eight deadline extensions for the closing to take place this summer.
More skin, less game
Besides the driving range, the Alico Family Golf Center includes 18 holes of miniature golf, a short-game golf course for beginners and a 5,600-square-foot clubhouse with a pro shop. Initially, the plan also included batting cages, bumper boats and an arcade.
But bankers balked at the batting cages and bumper boats. “Everybody kept looking at us as a golf course,” says Kraig Feighery. “We had to reduce the project by $1 million.”
That lowered the cost of the center to $3.5 million from the $4.5 million originally planned. If the project is successful in its first few years, then batting cages and bumper boats might be the second phase, St. Germain says.
“This is definitely outside the box,” says Thomas Wallace, president of Independent Development Services Corp., whose firm helped arrange the deal with financing from the U.S. Small Business Administration.
Wallace says the project needed three critical components: First, it needed operational partners with strong experience in the business. Second, they needed the right location, and third, they needed financially strong investors. “All three of those pieces had to be there,” Wallace says.
“We were a new business and that scares them,” Feighery acknowledges. “They didn't know how to classify us.” Amusement parks are risky credits, the bankers told them.
The lender, BB&T, asked the 10 investors to put in more equity and to personally guarantee the loans on the project. “They wanted more of everything,” St. Germain says. “We worked with them for months.”
Why not forgo a bank loan and simply raise money from private-equity investors? Feighery and St. Germain say they wanted to keep the investor group small and use a low-interest bank loan to pay for the project. Bringing in more people would have diluted ownership. “The more you do that, the less everybody gets,” Feighery says.
Ultimately, the partners had to raise $1 million so that Fort Myers-based construction firm Owen-Ames-Kimball Company could start building the center. “We had to be very conservative with the numbers,” says Feighery, who estimates annual revenues could hit $1 million and the business could be profitable in the first year.
“You seldom see a driving range go out of business,” says St. Germain. Even if the economy stalls, the owners are confident golfers will want to spend an estimated $12 to play the beginner golf course or $5 to $11 for a bucket of driving-range balls. “It's like bars; they do better in downturns,” St. Germain chuckles.