BMDD expects to reopen facility in less than year despite major mold problem

SPRINGFIELD – The now-closed Eagle Creek Resort on Lake Shelbyville could be reopened in less than a year with an investment of more than $3.7 million, according to the bidder selected by a state agency to operate the property.

The bid documents by BMDD Resorts of Decatur were obtained from the Illinois Department of Natural Resources through the Illinois Freedom of Information Act. The department also provided the proposals of the four unsuccessful bidders – Sullivan Marina & Campground LLC, GolfVisions Management Inc., KemperSports and HG Golf Properties LLC.

Further, the agency disclosed the scores that a three-member IDNR group assigned to the five bids. BMDD received 71.1 points (out of a possible 100), compared with 48.5 points for Sullivan Marina, 48.3 for GolfVisions of Northlake, IL., 41.5 for KemperSports of Northbrook and 40.5 for HG Golf of Danville, Ind.

Dennis Faynee, owner of Sullivan Marina, has filed a protest with IDNR regarding the awarding of the bid to BMDD. The department has 14 days to act on the protest, according to spokesman Chris McCloud.

"The Illinois Department of Natural Resources completely followed our procurement procedures and to suggest anything else is inaccurate," he said in response to a News-Gazette column Wednesday that included comments from Fayhee.

The bid package from BMDD, a recently formed partnership of Decatur real estate agents Dennis D. Ballinger and his sons Michael and Dennis Ballinger Jr., suggests that Eagle Creek, which was closed last summer by a court order, could be reopened in an estimated 45 weeks after $3.7 million in renovation work.

Among the work to be done, according to BMDD's plan, is about $200,000 related to the cleanup and removal of moldy furnishings and air duct cleaning, more than $500,000 in kitchen and mechanical improvements and nearly a million dollars' worth of room renovations.

The 18-hole golf course at Eagle Creek needs about $450,000 of investment, BMDD says, including equipment, golf carts, chemicals and repair of some damage.

The BMDD proposal does not say whether the golf course could be reopened this year.

"Currently the roof appears to be priority number one," wrote BMDD, estimating the cost of roof repairs at more than $400,000. "We have been advised that when the roof was installed it was done so incorrectly. Much of the so-called mold damage may be attributable to inadequate roof ventilation and faulty guttering and downspout drainage."

BMDD says that all mold infestation will need to be removed by a licensed mold remediation specialist, that many guest rooms have defective plumbing that will need to be replaced and that the "ceiling throughout the lodge must be replaced."

A malfunctioning docking system at the resort's marina, which "had been submerged for several weeks when the lake was at a high water level" will have to be repaired, BMDD said.

Among the improvements the new owners said they hope to make are "a partially enclosed facility for summertime outdoor entertainment," and a golf cart storage building. The last golf cart storage building burned down and was never replaced.

The new owners say they intend to finance the improvements with personal funds and local bank financing.

"(T)he first question anyone now visiting the facility will ask themself: 'How did this happen?'" the BMDD officials wrote. "There are undoubtedly many reasons and answers to this question. After interviewing a few former employees, we learned that overall poor oversight and owner management contributed largely. It was viewed that management stole from the operation. And employees stole from management. Employee morale was always low and undoubtedly contributed to a decline in guests. It appears that during the past years there was little maintenance performed."

The new owners say they "will oversee the day-to-day operations" of the resort and note that each of the principals "have much experience in the oversight of remodeling and renovation of derelict properties," including the $3 million renovation of a former Decatur nursing home that became the Tanglewood Village Retirement Community.

"We feel strongly that the biggest factor leading to the overall lack of success of former owners of Eagle Creek Resort has been the nonexistent marketing effort," BMDD wrote. The new owners said they would target event planners, golfers and brides-to-be within a 250-mile radius of the resort.

"Local residents, media and friends and family are an important group," they wrote. "They are a first means of building word of mouth. And they are the group most likely to put immediate dollars into Eagle Creek through dinner and day golf. Plus local media will help spread word of new ownership and build excitement for the future of Eagle Creek."

Included in the Eagle Creek proposal were two letters of recommendation. One was from Thomas Black, a Stonington banker who said he had known Dennis Ballinger for most of his adult life. The other was from former state Rep. Julie Curry, a Democrat from the Decatur area who is now a Springfield lobbyist.

"Dennis Ballinger has owned and managed a number of very successful businesses over the last 30 years by making wise decisions," Curry wrote. "I am confident that he will work night and day to make the Eagle Creek Resort a profitable investment for his business and for the State of Illinois."

The other bids

Following are details from the four other bidders for the Eagle Creek Resort property:

Sullivan Marina and Campground LLC:
Dennis Fayhee, who has operated the marina in rural Sullivan since 1995, proposed adding camping at Eagle Creek, relocating part of his marina operations to the resort, building a dry marina storage facility and using the resort as a wedding destination center.

"Our proposal suggests that a more reliable and ultimately more profitable, revenue-producing operation can be realized through development of Eagle Creek Resort as a destination-based camping facility with profit centers that include the ancillary operations of a hotel, golf course, restaurant, wedding chapel, family recreational facility, virtual golf facility and marina," Fayhee wrote.

His proposal said federal stimulus money could be used to renovate the mold-damaged lodge and convention center. "As part of our due diligence, we have identified precedence where similarly owned state properties have been upgraded, made more energy efficient and even qualified for mold remediation through stimulus money available through the 2009 Federal Recovery Act," Fayhee wrote. "Since Eagle Creek Resort is a state-owned facility, it is conceivable that a similar course of action would be a viable and ready solution."

But one of the IDNR officials scoring the Eagle Creek bids said Fayhee's plans to add cabins and the marina dry storage were questionable. "At this time it would appear this is not a viable option as no permission by the Army Corps of Engineers is guaranteed for this expansion," the official wrote.

H.G. Golf Properties:
The Danville, Ind.-based firm proposed only to operate the golf course at Eagle Creek. It said it could open the course no later than April 15, 2015, and proposed a $50,000 a year management fee payment.

"Vendor suggests it can operate the course on a 'break-even' basis," one IDNR scorer wrote, "but transfers all financial risk to IDNR."

KemperSports:
The Northbrook-based firm proposed only to manage the golf course, beginning this spring. It proposed a management fee of $8,000 a month plus annual 3 percent consumer price index adjustments for three years.

GolfVisions Management, Inc.:
The Northlake-based company proposed to operate the golf course this year only. It proposed a fee of $6,000 a month, plus 10 percent of gross revenue exceeding $600,000.

Remarks on bids

SPRINGFIELD – The following remarks were written on the scoring sheets of Illinois Department of Natural Resources staff members who reviewed the bid of BMDD Resorts Corp., the winner of the award to operate the now-shuttered Eagle Creek Resort near Findlay. The three staff members scored the bid proposals anonymously.

On the apparent adequacy and suitability of BMDD's concept for the resort:

"The vendor has supplied some ideas for marketing and provided a detailed, 3-year estimate of gross receipts and expenses. However, the estimates for the property supplied by the vendor indicate the property will be operating at a loss for those three years. This causes some concern the property may not be viable and the vendor will be unable to perform everything contained in their proposal."

(The estimated three-year profit and loss statements referred to above were not supplied to The News-Gazette in the documents it received from the IDNR).

Analyze the value of the proposed management program compared with the proposed capital investment:

"The vendor indicates they are willing to make over $3 million of improvements to the property with no financial expenditure by the Illinois Department of Natural Resources. In addition to using their own funding, the vendor indicates they will be paying the IDNR a flat rental fee."

"Vendor has a better understanding on the enormity of work and initial investment that is required to open the resort to the public."

Comprehension of the full market and economic potential of Eagle Creek:

"Vendor adequately addressed these criteria but I am a bit concerned about the proposed aggressive schedule to complete all phases."

Financial capability to meet the initial investment and continuing working capital requirements:

"The vendor's response to the RFP indicates they have more than adequate financial capability for the property operation."

"Vendor seems to have a fair understanding and commitment to meet the significant initial investment required to reopen."

Vendor's experience or provable expertise in the field of operations:

"Vendor exhibits little experience in the field of operations of such facilities, except for one supper club 30 years ago."

"The vendor appears to have ample exper- ience in the operation of the lodge. No information was provided indicating the vendor has experience in operating a golf course or a marina."

"Vendor seems to have substantial experience in hotels but not golf courses or marinas."

Reputation:

"Two very thorough letters of recommendation were provided by individuals who have worked with this vendor on numerous occasions in the past."

"Vendor appears to have a very good reputation, especially in the financial community."

Proposed operations and maintenance procedures:

"Vendor shows good intent to conduct operations acceptable to agency but provides few details other than stating it will hire professionals in all aspects of the operations."

"The vendor has submitted a very detailed and aggressive plan for the rehabilitation of the facility. The plans is to be completed in various phases over a 45-week schedule."

Additions or expansions of facility:

"The vendor has indicated they have plans to convert existing meeting rooms into a workout facility."

"Vendor provided some additional amenities but most capital will be invested in renovating the facility."