Resort report: Longtime Biz Buzz readers may recall an intriguing rumor circulating in June 2006 that Hyatt Regency Hotels Corp. was planning a massive $300 million resort on the island’s West End. If there were real plans for such a resort, they likely got scuttled by Hurricane Ike in 2008, which blew away every last remnant of the rumor. Shortly after Ike, there was the seismic cratering of the national real estate and financial markets, leaving few U.S. cities unscathed.
But the island market has more than rebounded — by all accounts, investment and interest is strong — and that rumor has resurfaced with gusto.
Confirmation was elusive, but reliable sources say the resort would rise on what was long referred to as the Marquette tract and before that Chapoton Ranch. Marquette Land Investments had ambitious plans for the site.
When Marquette bought the property in 2006 for $33 million, it was the largest single land deal in Galveston’s history. Chicago-based Marquette made national news for acquiring the Chapoton Ranch, one of the last large undeveloped tracts on the Texas Coast.
But after Hurricane Ike, about the time the U.S. real estate market collapsed, prospects for its proposed development of thousands of houses, condominiums, hotels, golf courses and more — dubbed The Preserve at West Beach — looked grim.
Bank of America began foreclosure proceedings on the prime property, which was collateral for a $36 million loan.
In 2011, the Texas General Land Office, which oversees the School Land Board, announced it would pay Marquette Land Investments $10 million for the tract spanning FM 3005 between 8 Mile and 11 Mile roads. The land board bought the West End property days before it was scheduled for auction.
The land office at the time said it had formed a limited partnership agreement with Marquette to develop the raw pastureland.
If Hyatt built a concept on the island similar to its Lost Pines Resort and Spa between Austin and Bastrop — as the rumor suggests it would — it could mean the island would get an 18-hole golf course in the deal.
Some islanders wondered why the land office would invest in a speculative real estate deal on the West End. But it wasn’t far-fetched. The land office manages the real estate assets of the $25 billion Permanent School Fund, money from which is spent on public education.
The land office has for years primarily managed state lands, leases and related transactions. These lands generate money primarily through oil and gas revenues but also through land sales and leases for surface uses.
But all has been quiet on the Marquette front since the land office made its surprising 2011 acquisition. Is there developer interest in the land? While not commenting on the Hyatt rumor, Brittany Eck, press secretary for the land office, said the land is for sale, is being marketed and there’s interest from a few parties, but no contracts. Stay tuned.