Theme park failure at Myrtle Beach Air Force Base cost investors millions
04/04/2013 12:00 AM
04/04/2013 9:31 AM
Long before the failures of Hard Rock Park and Freestyle Music Park along the Grand Strand, a theme park planned for the former Myrtle Beach Air Force Base went belly up even before the first shovel of dirt was turned – costing investors millions and proving an embarrassment for state leaders.
Following the base closure in March 1993, then-Gov. Carroll Campbell Jr. negotiated with the Air Force for a land swap that gave the state control of much of the base property. Campbell then set aside 1,054 acres for Timberland Properties Inc., a group with no previous development experience that claimed to have the financial backing to build a high-tech theme park called Isle of America as the centerpiece of a vacation resort that would employ 2,500 people and also include a 27-hole golf course, an amphitheater, golf villas and a luxury hotel.
Campbell and his staff never checked to make sure TPI had the money or expertise it claimed. By the time TPI defaulted on its contract to purchase the base land in 1997 – eventually filing for bankruptcy protection that same year – it became clear that the only money TPI ever had was from dozens of mom-and-pop investors who bought $2.5 million worth of what turned out to be worthless shares in the company.
TPI’s purported financial backing from sources as varied as a multimillion-dollar food service company, pop star Michael Jackson and a Saudi Arabian prince never materialized.
In hindsight, TPI’s failure – which predates the Hard Rock and Freestyle closings by more than a decade – has proven to be Myrtle Beach’s gain, allowing the creation of The Market Common urban village that city leaders had long sought and providing an opportunity for parks and other public benefits that wouldn’t exist today if a theme park had been built.
“Just the housing alone out there in the Withers Preserve area has more value than a theme park,” said Jack Walker, the city’s planning director.
Campbell’s administration had planned significant tax breaks for TPI and a completed theme park would have generated less revenue for the city than property taxes from the housing developments now being built at the base.
The theme park’s property also included land where the International Technology and Aerospace Park exists, which means there would be no business park today if Isle of America had been built. There also would have been no money from the Myrtle Beach Air Base Redevelopment Authority to help pay for aggressive expansion of Myrtle Beach International Airport and Horry-Georgetown Technical College, no property for Grand Park – “We’d probably only have the base recreation center and Crabtree Gym,” Walker said – and competing retail at the theme park combined with fewer housing units would have killed the urban village.
“At best, you might have a shopping center out there, but that’s all,” Walker said.
Robert Blackburn, a former real estate agent, had been promoting his idea for a World’s Fair-type theme park in the Myrtle Beach area for a couple of years before the federal government announced in 1991 that it would close the Myrtle Beach base. Blackburn, who died in 2004, had plenty of dreams but no land. That changed when the base closed and local and state officials started scrambling to replace the nearly 5,100 jobs that left with the military.
Georgetown lawyer Gene Lawrimore, who died in 1997, was a former member of the late U.S. Sen. Strom Thurmond’s staff and had served on Campbell’s statewide economic development board before his appointment in 1990 to the governor’s task force to save the Myrtle Beach Air Force Base from closure.
When Lawrimore realized base closure was imminent, he teamed up with Blackburn and became TPI’s general counsel. It was Lawrimore’s connection with Campbell and others that helped paved the way for base land to be set aside for the theme park project and TPI executives were quick to tell investors that their project had the state’s backing.
“They said the governor was very much involved, that [state-owned electric utility] Santee Cooper was putting a lot of money into the project, that they had $40 million to $50 million more than they needed to complete the project,” Paul O’Shea – an investor from Levittown, N.Y., who lost $30,000 – told The Sun News in 1997. “The next thing we know, we got a letter in the mail saying TPI had filed for bankruptcy.”
Campbell, who died in 2005, told The Sun News in early 1994 that he hadn’t seen any financial data for TPI even though he set aside more than one-fourth of the base property for the theme park. That appeared to contradict statements made weeks earlier that year by Doug McKay, the governor’s economic development aide, who assured local officials that “we’re not dealing in speculation on that land.”
Local leaders were skeptical. Former City Councilman Harry Charles urged city officials to take a cautious approach toward the theme park to make sure “we don’t end up with egg all over our face one of these days.” Doug Wendel, then-president of Burroughs & Chapin Co. Inc., sent a letter to Santee Cooper – the state entity that was selling the land to TPI – calling the theme park “grandiose” and a “highly risky venture.”
Campbell’s office, however, pushed the project forward and Blackburn repeatedly refused to provide any proof there was money behind the theme park.
Most of TPI’s nearly 130 investors were vacation home buyers recruited by a local real estate agent who received shares of stock in the theme park for his efforts, according to court documents. Kevin Kalinowski of North Massapequa, N.Y, was buying a condominium in North Myrtle Beach when he was steered toward the theme park investment. Kalinowski gave TPI $125,000 from a court settlement he received after an accident left him a quadriplegic.
Kalinowski told The Sun News in 1997 that he was outraged to learn from bankruptcy filings that Blackburn had used investors’ money to pay himself a $250,000-a-year salary. In addition, Blackburn and other TPI executives took family vacations and bought thousands of dollars in meals and entertainment every month instead of putting the investors’ money toward development of a theme park.
The purported investors that could have helped make the park a reality turned out not to have a stake in the development at all.
For example, Blackburn touted Fine Host Corp. – a Connecticut-based food service company that eventually was bought by Aramark – as one of the theme park’s equity investors. However, Fine Host President Richard Kerley told The Sun News “the deal was never consummated” because his company thought it would be a bad investment. Blackburn continued to publicly promote Fine Host as an investor more than a year after that company pulled the plug on the project.
Local officials were surprised when TPI met its late 1995 deadline to purchase from the state a 422-acre first phase of land for its theme park project for $3.9 million. Court documents later revealed that TPI had borrowed the money for that payment from a wealthy Upstate businessman. The payment, however, bought TPI more time to find someone with deep pockets to back the theme park – the company’s contract with the state gave TPI one year from the purchase date to begin construction.
That final year brought a series of bizarre announcements from TPI, which claimed Michael Jackson and then Saudi Arabian oil billionaire Al-Waleed bin Talal were backing the theme park. But when the deadline passed and TPI filed for bankruptcy liquidation, the company had just $87.66 in its checking account.
Investors talked about suing Blackburn and other TPI executives, but only one – Conway resident Karole Jensen – followed through. Jensen settled her case in mediation for an undisclosed amount. None of the other investors ever saw their money again.
Jensen was one of TPI’s founders, but she left the company early on because of disagreements with Blackburn and others. She continued to keep her money in the project, however, and believes to this day the theme park could have been a success if financing had come together.
“It would have been on a firm foundation if it had opened sometime in the mid-1990s, before the economic downturn,” Jensen said. The recession played a key role in the failures of Hard Rock Park and its successor, Freestyle Music Park, in 2008 and 2009, respectively. Those parks were located near the old Waccamaw Factory Shoppes just west of the Intracoastal Waterway along U.S. 501.
Jensen said it looked like financing for Isle of America would become a reality a couple of times while TPI had its contract to buy the base land. But each time, Blackburn and other TPI executives refused to step away from the project to let an experienced developer take control.
“They wanted it all,” Jensen said. “In the end, nobody got anything.”
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