Re: Horizon, a new 10,000 acre Master Planned Development, located on the west side of Hwy 49 approximately 25 minutes north of Gulfport/Biloxi
Dear :
At ultimate build-out Horizon will have 70,000 single-family residential homes and 30,000 multi-family units and an estimated population of over 300,000. Horizon will become the largest or second largest city in the State of Mississippi. The first 4,000 acres are under development with the first lots projected to be available for delivery in early 2008. Construction on the next large section should start the middle of next year.
Although there are still 30,000 families (over 90,000 people) living in temporary FEMA trailers in southern Mississippi, the driving force in the new home market and rental market for the next 10 years will be providing housing for casino workers. The State of Mississippi has decided that they want to become the second largest gambling destination resort to Las Vegas. The State has awarded 15 new gambling licenses for new casinos. The first two announced in southern Mississippi were both over $1 billion and one of those has already started clearing the land. Casino revenues are currently exceeding pre-Katrina revenues. The casinos pay very well and are employee intensive. Recent studies suggest that for every new casino employee hired by a casino an additional person will be added to the local workforce.
The State of Mississippi has taken a very pragmatic approach to solving the post Katrina problems. Everyone from the Governor on down has been onboard in helping. The State realizes that they need outside help to rebuild. Opposite of what you find in a neighboring state, bureaucratic red tape and payola are not prevalent every time you turn around. Since Katrina, the State of Mississippi has helped over 10,000 families buy a new or used house with an average grant from the State of over $62,000 per family!
Most people are not aware that the major storm devastation took place within a quarter mile of the coast for 110 miles. That is where the most expensive homes in Mississippi were located. To rebuild in those areas will now require building the first floor of the structures more than twenty feet above sea level. The developers of Horizon feel that many of these people will want to rebuild further inland in places like Horizon.
Last year the State of Mississippi sent out three billion ($3,000,000,000) dollars in checks to 23,500 homeowners that were not in the 100 Year Flood Plain and were not covered by insurance for their home losses up to $150,000. The State of Mississippi currently has over $12 billion in aid available to get people into new homes and apartments. The state is willing to provide grants for down payment assistance and mortgage rate buy downs. Fannie Mae will allow pre-Katrina FICO scores for mortgage qualifications and will allow employers to make the down payments for homebuyers. 50% first year accelerated depreciation is available for new rental property including single-family residential homes through 2010.
The Biloxi/Gulfport new home building market is probably one of the strongest residential markets in the United States, and could continue to be for the next 8-10 years. There is a need to rebuild 20% of the Biloxi housing stock (5,000 homes and apartments) completely destroyed by Katrina not including the partially damaged houses that need to be rebuilt. This does not include all the houses in Gulfport and the surrounding areas that were destroyed. The manager of the Beau Ravage Casino recently said that 30% of her employees are still in FEMA trailers. The 23,500 former homeowners who are receiving checks will want another home. If half of those buy new homes there is a need for over 11,000 new homes just from a group of potential buyers with cash in the bank. The new casino construction over the next 10 years will create even more need for housing.
There are a number of area firms planning major employment expansions such as Northrop Grumman with an existing work force in excess of 16,000 employees in ship building, the port, Trinity Yachts (the largest luxury yacht builder in the United States) and the new $3.7 billion dollar steel plant going in near Mobile which should be operational by 2010. It is anticipated that the steel mill will attract numerous additional new businesses in the surrounding area.
Horizon has 20,000 acres of gently rolling wooded terrain that is 200-300 feet above sea level. One of the first lakes to be built will be 1.5 miles long and the Biloxi River bisects the western portion of the property. The property fronts on the west side of Hwy 49 (the major north/south road in the area) just north of the Desoto National Forest and is about 17 miles north of IH-10. In 2008 the State of Mississippi plans to start expanding HWY 49 to an 8-lane highway for evacuation purposes. The State is constructing a new Hwy 67 as a limited access freeway. This freeway goes from IH-110, where most of the casinos are located, northwesterly and intersects Hwy 49 about 2 miles south of Horizon. The first half of the freeway should be opened the 3rd quarter of 2007 and the 2nd part to Hwy 49 should be completed 12 months later. At that time it should be a 20-minute drive from the casinos to Horizon. The State has indicated that they would like to extend Hwy 67 through Horizon. Major internal roads in Horizon will be asphalt 4-lane, or larger, limited access and esplanaded boulevards with concrete rollover curbs. All utilities will be underground.
There are 3 federally protected pristine rivers that drain the whole Gulfport/Biloxi basin. Because of this, it is virtually impossible to get a discharge permit for a sanitary sewer plant to discharge into any of the tributaries that drain into these rivers. In addition to the sanitary sewer problems, wetlands are another major issue. Many tracts for sale have 30-90% wetlands, and to make matters worse, the Corp of Engineers says that virtually all these wetlands are high-grade wetlands.
The developers have gotten approval from the State to discharge up to ten million (10,000,000) gallons of treated effluent into the Little Biloxi River which bisects the property. Approval for a permanent sanitary sewer system to treat sewerage for the first ten thousand (10,000) residential units has been obtained from the State MECQ. In 2008 the developers will start building a new major permanent sanitary sewer plant to handle all of Stone County’s sanitary sewer needs. A number of major lift stations will be constructed onsite as needed. Water plants with above ground storage tanks will be installed throughout the property. The developers have virtually all the Corp of Engineer permits in hand needed to develop the entire 20,000 acres. In general the soils are sandy (low PSI) with an underlying clay base. Heavy equipment can normally be back in operation within 24 hours of a major rain.
Any detention requirements will be provided by the developers. A major overhead primary electrical line bisects the property. Gas will not be available to the site, but Cable TV will be. There is a rail line that bisects the property near Hwy 49, and the railroad company has agreed to install a 57 car rail spur in 2008 for material yards for suppliers. The developers plan to install an asphalt plant and concrete plant on site to guarantee the builders a steady supply of asphalt and concrete at a reasonable price. They have also decided to build four or five 18-hole golf courses onsite. The first two should break ground in 2008. There are 13 existing golf courses in the area including courses designed by Arnold Palmer & Jack Nicklaus. In the next section to be developed in Horizon, the developers plan to include a 100 acre recreational center including a large number of ball fields. There is a very nice Junior College within a half mile of Horizon.
The State is close to approving a passenger train that would make a number of trips daily between Hattiesburg and Gulfport/Biloxi. An onsite rail station in Horizon is currently being designed. In the future most casino workers would be able to commute to work by train from Horizon.
Because there will only be a county building permit required with no building inspections, the developers are being very careful in choosing who they allow to build in the project. They want only very experienced builders who are well financed and have good track records. As an example, Meritage who is the 13th largest homebuilder in the U.S will be the lead single-family homebuilder.
The developers have extensive building and development experience. Mike Adkinson has built over 15,000 apartments units, was a major high-rise condo developer in Florida, at one time was part owner of over 2 million square feet of retail, builds single-family residential homes and develops residential subdivisions. Bob Windom has built over 85 hotels and motels; at one time he was the third largest owner of timeshares in the U.S. and has owned and operated a bank.
The developers will be front-ending $50 million for the school district to build two new elementary schools in Horizon. The developers will also build two Sheriff’s Department facilities, a fire station and a town hall that will include some county offices. Home Depot has offered to build the largest Home Depot in the United States in Horizon. Wal-Mart has said they would like to build a Wal-Mart with grocery store next year or the year after.
Major issues facing builders in the marketplace are labor and housing for subs. There will be a shortage of skilled labor in the future, so labor will need to be imported to the area. A number of the national real estate markets are slowing down, so attracting subs should be easier during the next 18 months. To help provide housing for the construction workers, the developers plan to construct 200 modular homes per month, of which a number of these units would be available for builders and contractors as needed.
Windstorm insurance rates are cheaper north of IH-10 (the property is north of IH-10). Depending upon the deductible, frame construction windstorm rates for multi-family are $.584-.688 per $100 valuation. Masonry construction rates are a little less. The single family residential rates are less and would be comparable to the Houston market. The tax rate is 120 mils on 10% of the property’s assessed value. There is a 5% State Income Tax, and in general Mississippi taxes are low.
The State of Mississippi and Fannie Mae have both indicated an interest in leasing space in the Welcome Center at the entrance to Horizon. They would pre-qualify potential home buyers before they went to meet with the builders. That way the potential home buyers would know reasonably how much and what type of aid they could get and what type of loan they would qualify for. Haley Barbour, the Governor of Mississippi, has said that the state is prepared to put all thirty thousand (30,000) families in southern Mississippi still living in FEMA trailers into single family homes and apartments.
Lot sales will be made to builders on an option contract going out up to 3 years. The single-family site built residential homes will probably range from the $160’s to over a million. Builder lot prices start at $35,000/lot for a 60′ X 125′ lot (the minimum lot size for Stone County). Nineteen and one half (19.5%) percent non-refundable earnest money will be required on each contract. All lots will be out of the 100 Year Flood Plain. A Phase One Environmental Study and Wetlands Study will be provided to the builder prior to the initial closing as well as title insurance at closing.
The front yards need to be solid sod and a sidewalk is required across the front of each lot. The minimum house size is 1,400 SF of air conditioned and heated living area. Building set backs are front - 25′, sides 5′ and back 15′.
If the above sounds like it might be of interest to your firm, we would be happy to set up a meeting in Biloxi for your people to meet the developers and engineers. We don’t think there is a better single-family building opportunity than Horizon anywhere in the United States. We can get you comped at the Imperial Palace Hotel and Casino for all your food and lodging. Please call Gary Maddox at (832) 741-4078 or Ben Koshkin at (832) 443-4366 if you are interested in meeting the developers and looking at the property. You won’t be disappointed.