Note from the Panhandle Citizens Coalition  11/18/03

Hi Media Folks-We attach the following for those who may not have been following the St. Joe Company's activities closely over the past several years-we believe it was from the Panama City News Herald (it was just provided to us today). This is being done in preparation for the two big events which are going to be held on our Super Tuesday, November 25th.

The first of those two events is our push early that day to get the Bay County Commission to set a public referendum on whether or not the county builds a brand new airport. A new scientific poll done by Mason-Dixon shows 70% of the citizenry want to vote on the airport and the chair of the commission has not yet been forced to take a stand since at their last public meeting the commission split 2-2 on the matter and he was absent.

The second is when we trustfully celebrate the victory of our first two referendums in the city of Carrabelle (Franklin County) where a court had to order these measures voted on. In advance of that election, the city is holding a town hall meeting Thursday night to discuss the measures and our folks will be present there as well.

Should you want anything else before these events occur, please do not hesitate to contact us at 850-421-2483 or 850-339-5462. Thanks in advance for your continued cooperation and know we will be in contact soon again. Sincerely, John Hedrick, Chair, Panhandle Citizens Coalition

A Land Giant Is Stirring. Will Florida Ever Be the Same?

By DOUGLAS FRANTZ  MONEY AND BUSINESS/FINANCIAL DESK April 12, 1998, Sunday

JACKSONVILLE, Fla. -- REAL estate development in Florida conjures up visions of Eden gone awry. Over the last century, the state's subtropical environment has been battered by an onslaught of tourist attractions, billboards, strip shopping centers, beachfront condominiums and featureless subdivisions that have drained the wetlands and scarred the landscape. Planning has been haphazard and sometimes completely absent.

Now, the St. Joe Corporation, the quirky public company that is Florida's largest private landholder, insists that it intends to break with that pattern as it develops a million acres in the panhandle, some of the last pristine tracts in this state.

The stakes are high, both for Florida's future and for St. Joe shareholders -- the latter primarily a duPont family trust that supports clinics for the elderly and disabled, though Wall Street, too, is beginning to take an interest in a company that it long could comfortably ignore.

For decades, St. Joe was an undermanaged holding company with assets in timber, transportation and banking that fed the trust in dribs and drabs. But all that changed a year ago when Peter S. Rummell was hired away from the Walt Disney Company to become St. Joe's chief executive, chairman and in-house rabble-rouser.

''I felt a little like I'd stepped into a time warp,'' said Mr. Rummell, who was head of Disney's theme park and real estate development divisions. When he first asked for an overview of St. Joe's holdings, Mr. Rummell recalled, he was given a yellowed Esso gas-station map so old that it did not show Interstate 95, the main highway down Florida's east coast. Today, a large studio on the ground floor of St. Joe's headquarters here houses a research and development center with huge satellite photos delineating the company's land.

''You don't see this quantity of assets that have been maintained so conservatively for so long,'' Mr. Rummell said.

After a year spent assessing those assets and importing a team of outside managers, Mr. Rummell has begun to carry out an ambitious plan with social implications that could ripple across Florida -- and perhaps beyond.

In the coming decade, St. Joe intends to open up resort and residential development not on the east or west coasts of the state but along the panhandle, which despite its white-sand beaches on the Gulf of Mexico has lagged behind in growth and prosperity.

The company's holdings in the region include 30 miles of frontage on the gulf and 250 miles on inland waterways and lakes. The centerpiece of the proposed development is a series of planned communities, resorts and retirement centers that would transform not only St. Joe's vast tracts but also the panhandle itself.

Rather than the high-rise beachfront condominiums and bland retirement villages that are the hallmarks of Florida, St. Joe wants to build places that are more walkable and human-scaled -- shaped around the environment instead of ignoring or damaging it. The models are not Miami Beach or Fort Myers but the more recent communities of Seaside and Celebration. St. Joe's towns are intended, too, to reshape Florida's demographics, by appealing to families and job seekers, not just the retirees who have been the primary targets of Florida developers in the past.

All this is risky, of course. Undeveloped land is the most volatile of real estate assets, and Merrill Lynch -- which recently began following St. Joe -- estimates that 35 percent of the company's value is in vacant land. So any significant downturn in the state or national economy could poke a big hole in Mr. Rummell's balloon.

Plus, there are good reasons that the panhandle has been slow to develop. Transportation into the region is weak, making it difficult to attract visitors beyond a day's drive away. There are few hospitals or clinics -- vital for the second-home and retirement markets -- and not enough of the good schools essential to attracting permanent residents. To outsiders, the area is probably best known for replacing Daytona Beach as Florida's No. 1 destination for hard-drinking college students on spring break.

But Mr. Rummell has assets beyond his own experience and St. Joe's vast acreage, which is only slightly smaller than the state of Delaware. The company's balance sheet is debt free. The trust has given him a green light to shake up St. Joe's stolid status quo. He has already made a key acquisition -- a controlling interest in the Arvida Company, which built Boca Raton and many of Florida's more uncharacteristically charming planned communities and will build most of the houses on St. Joe's panhandle lands.

''If we are smart about it -- if we are methodical but aggressive -- it is a huge opportunity,'' Mr. Rummell said. ''We have an opportunity to create a very special kind of region.''

Roots in Rebellion

St. Joe may have been a sleepy business for decades, but Mr. Rummell is not its first rebel.

The company was founded by Alfred I. duPont, the black sheep of the Delaware family that grew rich selling gunpowder in World War I. He battled other family members for control of the business and caused a social ruckus in 1921 when, at 57, he married Jessie Ball, who was 21 years his junior.

But it was not social ostracism that drove Mr. duPont south; it was business. A cousin and rival, Pierre duPont, became Delaware's tax commissioner and promised to make the rich pay their fair share. When a tax deputy came calling to review Cousin Alfred's accounts, he was turned away.

''I'll be damned if I'm going to have Pierre going over my books,'' Alfred duPont snapped, according to a published family history. Instead, he transferred all his assets into Florida corporations and, with his bride, moved to Jacksonville in 1926.

While the rest of the country was enjoying prosperity that year, Florida was suffering from the effects of a devastating hurricane and collapsed real estate prices. Mr. duPont, with a personal fortune of $70 million to $200 million, took advantage of the situation and bought large tracts of land for just a few dollars an acre, particularly in the panhandle.

In a single transaction in 1933, he bought 240,000 acres, including virtually the entire town of Port St. Joe on the gulf. The deal included two railroads, some telephone companies and a paper mill that eventually gave the whole enterprise its name: the St. Joe Paper Company.

Mr. duPont died in 1935, leaving the bulk of his holdings in trust for the benefit of his wife; after her death in 1970, the proceeds of the trust were designated to help disabled children and the elderly.

Through the trust, control of the company fell to Mr. duPont's brother-in-law, Edward Ball, a pugnacious man who ruled with the firm hand of an autocrat. He added to St. Joe's land holdings and expanded its bank, Florida National, into the state's largest.

Mr. Ball acquired the Florida East Coast Railway Company, the historic line that runs from Jacksonville to Key West and defined migration to Florida's east coast.

St. Joe's rich lore contains a story, probably apocryphal, about an encounter in the early 1960's between Mr. Ball and Walt Disney. As part of his quiet search for land to build a new theme park in the wake of Disneyland's success, Mr. Disney supposedly inquired about the possibility of buying a chunk of St. Joe's panhandle holdings.

''We don't deal with carnival people,'' Mr. Ball is said to have replied -- forever altering the course of Florida land development and leaving intact the domain now being prepared for development by Mr. Rummell, the former executive with Disney.

Mr. Ball died in 1981, but control of the company remained with the Alfred I. duPont Testamentary Trust, which as recently as 1990 owned 86 percent of St. Joe. (Its holdings now amount to about 55 percent of the company.)

The beneficiary of the trust, the Nemours Foundation, was allotted 3 percent of the trust's market value each year to run clinics in Florida and Delaware.

Only in the early 1990's, after representatives of the trust, Florida officials and outside investors began to demand that it produce more income, did change begin to shake St. Joe.

To focus on real estate, the company put other assets up for sale, including the namesake pulp and paper mills, container plants and most of the phone business. A deal is pending for the Federal Government to buy a sugar plantation in the Everglades as part of a conservation program.

In 1996, the company was renamed the St. Joe Corporation, and a headhunter was hired to find someone to run it.

Real Estate Man Returns

Peter Rummell was 51 when St. Joe came knocking. As chairman of Walt Disney Imagineering, he oversaw the development of a wide range of Disney projects, from Euro Disney outside Paris to Celebration, the company's new planned community in central Florida. He had an especially strong relationship with Michael D. Eisner, the chairman of Disney.

Mr. Rummell started out as a developer in the early 1970's, working on Amelia Island Plantation near Jacksonville for the Sea Pines Company. He also worked for Arvida and spent two years as vice chairman of the Rockefeller Center Management Corporation in New York before returning in 1985 to Arvida, which had been acquired by Disney. He soon moved to the Disney side of the corporate aisle; Arvida was eventually sold.

At heart, though, Mr. Rummell is a real estate man, he says, and Disney is an entertainment company. So in January 1997 he accepted the invitation of the St. Joe board to try to reinvent the company -- and real estate development in Florida.

Besides the acquisition of Arvida, his early moves have included deploying stock options and bonus incentives, previously unheard of at the staid St. Joe, to attract a new team of senior managers. Charles A. Ledsinger Jr. was brought in as chief financial officer from Harrah's Entertainment Inc.; he recently became president and chief operating officer. Two former Disney executives, Robert M. Rhodes and Michael F. Bayer, also took senior management positions.

Mr. Rummell got a good deal for himself, too. His base salary in 1997 was $600,000, with a performance-based incentive bonus that added $300,000. He also received $5 million worth of St. Joe stock to compensate him for the value of stock options he forfeited by leaving Disney. Plus, he received stock options that, if the company's stock rises an average of 10 percent a year for the next decade, would be worth $123 million. (Since Mr. Rummell signed on, the stock is up about 60 percent; St. Joe shares ended the week at $33.625 on the New York Stock Exchange.)

His immediate task, though, is to start enough real estate projects fast enough to satisfy Wall Street that St. Joe has the cash flow to be a good investment now, not just years from now when its big developments come on line.

Toward that end, the company, borrowing a page from Disney, has branched into the entertainment business. Its most significant deal is with the National Football League, to develop interactive entertainment centers that will include technology-based games, retail stores and restaurants in an atmosphere similar to that of a football stadium. Tentatively called NFLX, the first of the 7 to 10 ventures is expected to open late next year in New York, possibly in Times Square.

But the real test for St. Joe will be developing its hundreds of thousands of acres in northwest Florida over the coming decade in a way that provides long-term value for its shareholders and long-term benefits for the state.

Expanding a Beachhead

One model for what Mr. Rummell has in mind sits squarely in the midst of some of St. Joe's most valuable land. St. Joe did not build Seaside and will not duplicate it, but the company's plans are taking some of their inspiration from the 240-home village surrounded by St. Joe's panhandle real estate.

Seaside, about 20 miles west of Panama City, is the beachhead for neotraditional town planning. Probably no other 80-acre strip of land in America has been so scrutinized and analyzed in the last decade as its picturesque collection of homes, built since 1981.

The houses are, by regulation, wood-shingled and clapboard, with deep front porches and whimsical cupolas. But the changes exemplified by Seaside are more fundamental than architecture. They go to scale and to the way people live. The streets are narrow, putting a premium on walking. The town is organized around a center with shops and galleries. While there are a few houses directly on the gulf, which is across the road from the main part of town, walkovers and other devices are intended to open the beach to all residents.

A stroll through Seaside uncovers the real gold mine envisioned by St. Joe. It is largely a second-home community, and the signs outside most houses are hand-lettered with the names and hometowns of its residents: Atlanta; Memphis; New Orleans, Birmingham, Ala. These are the population centers, all within a day's drive, that St. Joe hopes will provide vacationers and second-home buyers for its first large development, tentatively called Seagrove.

''There is this wide arc that goes into Texas, up to Memphis and north of Atlanta, and the people within that arc are used to coming here,'' said Timothy D. Edmond, the Arvida vice president who is supervising the planning for Seagrove. ''And, looking at Seaside, we know they have money to spend on second homes.''

Seagrove has 1,400 feet of beautiful beach frontage on the gulf and 500 acres that wrap around Seaside. The first phase calls for a resort hotel more expensive and luxurious than anything in the region, some retail space and a beach club on the gulf side of the property. Vacation and retirement homes will follow on the other side of the road, winding along a freshwater lake and behind Seaside.

Master planning has already begun, and Mr. Edmond said the process of receiving governmental approvals was expected to be completed next year.

But that may be optimistic. Florida's development rules have become tougher in the last decade; here, as in other places transformed by breakneck growth, environmental concerns can cause delays in even the most environment-friendly projects.

''Some people don't like to see big, beautiful tracts of land developed,'' noted Paul F. Bryan, the Orlando-based president of LaSalle Partners Development, a unit of a Chicago real estate firm.

St. Joe's long-range plan is to get people to come to Seagrove for a vacation or convention, like what they see and decide to return, first in a vacation home and then as retirees. The theory is that once the place finds its center of gravity, services will follow that attract permanent residents.

Mr. Rummell acknowledges the work ahead. The region, for example, needs better medical services. ''If you are 65 years old and you've started going to a cardiologist routinely,'' he said, ''we have to make you comfortable that you can get quality care close to your home.''

There are also plans to expand at least one runway at the nearby Panama City airport, which now can handle only short-hop aircraft, and discussions about a major feeder highway.

Local government is quite welcoming. Seagrove is in Walton County, a thousand square miles stretching from the Alabama border to the gulf. Except for the beachfront, the county is sparsely populated and generally eager for the jobs and prosperity promised by new development.

''A lot of the most valuable land has been purchased for preservation by the state, so it's off the tax rolls,'' said Tom Powell, executive director of the nonprofit Walton County Economic Development Council. ''The county government realizes that its salvation is in the development of the remaining existing land.''

Nowhere is the warmth of St. Joe's relationship with government more evident than southeast of Tallahassee, the state capital, where the company is planning Southwood, which it envisions as a neotraditional community of 12,000 people and 6,000 new homes on 3,200 acres of rolling land now covered with pine trees and dotted with lakes and ponds.

In a speech early this month in Tallahassee, Mr. Rummell offered free land for a future medical school under consideration by state legislators and promised to help improve roads in the surrounding county. ''Others may build developments,'' he told the Economic Club of Florida. ''We build towns.''

The first public hearing on the project is scheduled for July. Already, though, the company has been meeting regularly with state and local officials and citizens groups.

State officials praised the willingness of St. Joe management to negotiate over the most sensitive issues, including affordable housing -- something that its predecessors never did in previous stabs at developing the land and a far cry from the days when Ed Ball dictated terms to Florida lawmakers.

''The old St. Joe categorically rejected providing affordable housing, and that's why they left town and never did the development,'' said Jim Murley, secretary of the Florida Department of Community Affairs. ''The new management is doing education and housing and all the things that are important, not only for Southwood but for the region.''

Mr. Rummell is convinced that there is money to be made in Florida with a kinder, gentler type of development. He says he does not foresee a Disney-like theme park or an Orlando-like megalopolis in western Florida. Instead, he envisions a series of towns and communities where people of all ages and economic means live in proximity. Rather than cutting off beach views with high-rise condominiums, he wants to build low-rise hotels and beach clubs that offer permanent access to residents who do not live on the beach.

''I think it's the right location at the right time,'' he said. ''We can change the story of Florida development if we do it right.''

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