PORT ISABEL — Plans to rehabilitate the historic Yacht Club Hotel came to a close in February, when the city sold the building to a local family.
Laura Martinez said she, her parents and two brothers don’t yet have final plans on what they will do with the property but were moved to purchase and restore it.
“I can tell you what we do is going to benefit the city of Port Isabel and the community,” she said. “We’re passionate people and we’re all very busy, but we feel deeply about the yacht club.”
While it’s the beginning of the revitalization process for the Martinez family, the sale marked the end of about four years of work by city and economic development corporation officials with similar ideas of returning the dilapidated building into a semblance of its former glory.
Ultimately, the city spent about $2.5 million in loan funds and returned grant money meant to help it establish a culinary arts institute that never materialized. The yacht club revitalization is the subject of a forensic audit, expected to be presented to the City Commission this week, that was requested by the U.S. Department of Agriculture, which awarded the city a grant for the project.
The two-story Spanish Colonial Renaissance building was constructed in 1926 and counted President Warren G. Harding, gangster Al Capone and famed pilot Amelia Earhart as guests during its heyday.
Hopes were high when Port Isabel purchased the Yacht Club Hotel on Yturria Street in 2014 for $750,000 with a vision to turn the crumbling building into a culinary arts institute. Consultant Teresa Fonseca of STAR Consulting projected the development would require a total budget of $5 million.
“This was for the future of the city,” said Joe Vega, mayor at the time. “There are a lot of kids in the area that can’t even afford to drive (to local colleges).”
That same year, the Texas Leverage Fund awarded the Port Isabel Economic Development Council a $2.5 million loan for the project, and the city won a $1.2 million grant from the U.S. Department of Commerce Economic Development Administration.
Former City Manager Edward Meza was ousted by the City Commission in May 2015.
When Jared Hockema joined the city administration as interim city manager, he noticed the yacht club plan’s shortcomings. Time constraints attached to the federal grant required Port Isabel to break ground on Yacht Club Hotel renovations in the fall.
There wasn’t a permanent funding source, Hockema said, and construction plans hadn’t been drawn up. While the city had been in talks with Texas State Technical College about renting the planned culinary institute, there weren’t tenants lined up before it purchased the property.
An independent review of the restoration plan projected the cost of getting the yacht club even minimally ready for tenants at nearly $6.8 million. The February 2015 report from EMC International states, “Based on our 30 years of experience in construction … these values substantially exceed what could be considered a commercially viable project.”
Hockema said he was informed by consultant Petra Reyna that the city was pursuing appropriations from state lawmakers, who were gathered in Austin for the 85th Legislative Session.
Spokesmen for Texas Sen. Eddie Lucio Jr. and Rep. Rene O. Oliveira said the legislators had been approached in late March 2015 by Reyna and Vega about getting funds earmarked for the yacht club, but it was considered late in the session and unlikely to succeed.
“We just didn’t have time to get legislative support because of the time it came in,” Oliveira Chief of Staff J.J. Garza said. “Doing a rider like that is very difficult. You’ve got to line up a lot of people to make it happen.”
The city paused plans to move forward with the yacht club renovations in July 2015, and Hockema said Texas State Technical College determined it wasn’t feasible for it to operate a culinary school in Port Isabel.
“People were behind this project because they believed in the city, and they wanted to save this building,” he said. “All of the things you need to develop a project like this really hadn’t been done, and it’s unfortunate because it’s been a pretty big hit to the city.”
Hockema said the $1.2 million federal grant was returned and a $300,000 USDA grant for kitchen equipment was allowed to expire. State loan funds left over after purchasing the yacht club, consultant fees and debt payments were used to shore up a deficit in the city’s budget, he added.
Hockema said Port Isabel will be paying back the $2.5 million loan for another 12 years.
“We can grow out of this situation because it’s all about time,” he said. “As we have some growth, hopefully it’s a smaller and smaller part of our debt.”
The city sold the Yacht Club Hotel to the Martinez family for $430,000.
Vega and Meza are adamant that had the city continued to pursue the project, it would have been successful. The current and former city officials agree about one thing: they are happy to see restoration efforts continue.