Fire Island In Chaos?

Kelly Rowland performing in Fire Island

markatlarge Exclusive:

New York’s legendary gay resort, Fire Island Pines, is floating on a sea of discontent. The drama all started last week when markatlarge broke the rumor that 80% of the commercial area in the Pines was up for sale. It seems that rumor only scratched the surface of the problems facing the owners. Fresh rumors surfaced last week about in-fighting, a seven-figure financial loss and a major shake up in the management team. Ever since a fire destroyed the two main buildings in the Pines’ commercial area, one owned by the LaFountaine family and the other owned by FIP Ventures, people have been concerned about the fate of the ‘Gay Mecca.’ While the LaFountaines have been flooding social media with the rebuilding activities of their structure, FIP Ventures has had very little to say about their plans. The FIP Ventures site where the Pavilion once stood lies devoid of any construction activity, in stark contrast to the LaFountaine building that is in full construction mode and expected to be completed by July 4, 2012.

The Pavilion After Fire

Let’s start by giving some clarity to the chief rumor: It looks like the sale of the Fire Island Properties owned by FIP Ventures will not happen. The properties were being shopped around as far back as December according to Eric Von Kuersteiner, the prior owner, who was approached by an interested buyer seeking advice on the deal. Eric didn’t reveal the details of his conversation but told markatlarge that he feels the property without the Pavilion is not even worth the $10 million mortgage against it. Considering the purchase price was $20 million ($17 million plus capital and closing costs) just two years ago, it’s highly unlikely a majority of the 39 total investors will agree to sell the property at such a massive loss.

Eric von Kuersteiner with Carson Kressley in Fire Island

Mr. Von Kuersteiner believes the Pavilion will have to be rebuilt in order for the investors recoup their money, but FIP Ventures has champagne dreams on a Budweiser budget. Sources close to the investors confirmed that the insurance company paid $2.4 million that will be held by a bank and distributed as reconstruction progresses. The destroyed Pavilion had been rebuilt in 2007 on a tight budget for close to $2 million dollars mostly because Mr. Von Kuersteiner had the luxury of using his own construction company to keep the cost down.

A potential sale would also face further complications by a 60-year lease set to expire in approximately 12 years. FIP Ventures runs part of its business, the Canteen restaurant and the pool area, on leased land. In a “sweet heart deal,” as characterized by Mr. Von Kuersteiner, the original owner was given it for a nominal amount from the developer’s family. Once that lease expires it will quickly go up to market value or be sold, significantly increasing the operating expenses for anyone who does business on that land or lose 40% of its commercial property (5 lots total in the harbor: Pavilion, Canteen, Pool area, Hotel and Blue Whale, 2 are leased).

The Pavilion before the fire

It would be hard to see the sale of the Fire Island property owned by FIP Ventures in the near future; rebuilding will seemingly be the only viable option. Back in January, FIP Ventures hired the high profile (and probably very expensive) architects Diller Scofidio + Renfro (DS+R) and a smaller architectural firm HWKN to work on a temporary structure for the 2012 season and a permanent structure for the following year. Both firms responded to email requests saying that they are still involved in the project. However, several people have questioned whether DS+R was actually hired or if it was a stunt to make the property look more attractive to a future investor. DS+R did not respond to a follow up request to confirm they have an actual contract with FIP Ventures to do the work. HWKN confirmed to markatlarge that they are working on designs for both the temporary and permanent structures. DS+R’s Charles Renfro, who spent many summers on Fire Island, told Out magazine the new building would be “provocative and distinctive enough for a spot that’s been a gay playground for decades.” One could expect based on Renfro’s sentimental attachment to Fire Island his rate would be at the low end.

Typically an architectural firm will get 5% to 20% of the cost of the project. If you do the math on the allegedly $2.4 million paid out by the insurance company, it doesn’t leave much money for a new structure. FIP Ventures could always put out prospects for more investors but it might be a tough sell. A source close to the investors said the properties lost close to $1 million in 2011 after FIP Ventures paid the $900,000 interest-only mortgage payments plus taxes and fees.

If that figure is true, then the properties did worse under the ownership of FIP Ventures compared to when it was run by Mr. Von Kuersteiner in 2009. According to figures published in the FIP Ventures prospectus, in 2009 the Fire Island properties made $1.5 million in profits on gross receipts of $3 million. The prospectus to investors went on to say that the assets were drastically underperforming and revenue could be increased 6 fold by more effectively utilizing the space and improving the property. If the sources’ accounts are true then that did not happen. This makes it very challenging at best to get additional investors for the properties.

One might look at the situation and say, “it’s the troubled economy finally catching up with the wealthy gays,” but party promoter Daniel Nardicio might beg to differ. Nardicio’s Friday night party, in the neighboring community of Cherry Grove, doubled its business in 2011. A majority of Nardicio patrons came from the Pines either by walking or via a water taxi. Nardicio is expecting to do even better business this year considering the only other building in the Pines (owned by the LaFountaine family) capable of hosting nighttime entertainment won’t be open untill the 4th of July. Nardicio is so confident about the 2012 season he has expanded his party to Saturday night, added an afternoon Tea Dance and is booking talent for shows on Saturday nights that include stars like Sandra Bernhard and Margaret Cho. And to ensure the boys of the Pines can get home quickly, Nardicio is paying the water taxi company to operate an extra hour to 3am.

The main investors in FIP Venturs: Matthew Blesso, Seth Weissman and Andrew Kirtzman

It seems the improvements the investors made to the properties are not paying off as expected. Some of the changes include improving the Pavilion’s sound system and lighting, configuring the pool for outside dining, drinks and music, remodeling the Canteen that offered light food fare options and improving the quality of the food at the Blue Whale. The ever-finicky gay consumer, who is almost impossible to please, was never quite happy with what was considered the overall unfriendliness of the staff who were not quite as attractive as in years past. [Before you judge, check out the bona fide occupational qualification at straight-guy Mecca Hooters. And for you snobs, find me one pleasantly plum girl at the Soho House.]

With the alleged financial situation and management that seems to be driving people to its competition, a major change needs to happen. This might explain why Andrew Kirtzman and Seth Weissman are allegedly out from running the day-to-day operations and replaced by President and COO of Blesso Properties, Albert Price (Blesso Properties is a 50% owner of FIP Ventures whose president and founder is Matthew Blesso). Can the very straight Mr. Price take over the helm of a gay paradise and turn around its fortunes? That remains to be seen. It’s expected that an FIP Ventures investors meeting will be held soon and a press release will be issued with their future plans. Over the next week or so we might see how FIP Ventures plans to turn around this situation.

See the response posted on behalf of FIP Ventures regarding the rumors of a sale

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26 thoughts on “Fire Island In Chaos?

  1. Pingback: Misinformation Continues on Fire Island's 2012 Season-Find Out the Latest.MarkatLarge

  2. Pingback: Fire Island Legendary Pavilion to be Sold? - MarkatLargeMarkatLarge

  3. Jay Salzberg

    Isnt Tino Papadakis in charge? FIP Ventures announced they hired him a month ago on their facebook page. 

    Reply
    1. Bob Howard

      It is true that Tino is the general manager. He worked for the master, Bob Pontarelli who owns and operates Elmo, Baracuda, and Industry. Great training. We will see if he learned his lessons well. 

      Reply
      1. markatlarge

        Bob and Jay, I researched and contacted several sources for this story. If any part of the story is inaccurate I would be delighted to make a correction.  Please have your sources contact me with the correct information that can be verified.  

        In this post I am not referring to the General Manager, I am referring to the Fire Island Ventures person who will make the decision about the day to day operations. It’s my understanding in the past those duties were performed by Seth Weissman and Andrew Kirtzman. According to multiple sources Seth and Andrew are out and Matthew Bellso guy is in guy is in. If you have someone that want to go on the recored and say otherwise have them contact me and I will make the correction. 

        Reply
        1. Jay Salzberg

          Thanks for clarifying.  The owner’s never directly managed the properties themselves.  They always had operators working for them like the almond guys and the GM.  It looks like they just hired another GM.  Hope this one works out!  Personally, I just want a place to have a drink and dance a bit. 

          Reply
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  8. Jon Wilner

    Just what we needed, another blog.  As the real estate Broker who sold the properties for John Whyte to Eric Von Kuersteiner in 2004 and then sold them again to Seth Weissman, Andrew Kirtzman and Matt Blesso, in 2010, I can tell you that there are always rumor after rumor ever since John Whyte purchased the Pavilion in 1989, thereby increasing the ownership of the Blue Whale and the Botel to become the owner of 80% of the Pines commercial properties.  One of the great characteristics of the Pines is that every owner and renter feel that they own a piece of the Pavilion because it is such a large part of our lives.  After all, that is where our memories of those gone remain alive, and face it, Fire Island Pines represents quality time and Summer enjoyment for all of who have our roots there.  My thrill is watching new renters arrive for the first time in May as they fall in love with our unique and special community.  When it works, there is no place like Fire Island Pines, when it doesn’t, they type on their favorite blog.  Let me clarify that the reason that Nicole LaFountaine began building the SipnTwirl building, actually it’s the Danikki building, immediately was because she was rebuilding the exact same building.  Over 300 Pines residents showed up at the building dept to give Nicole their support for the proper building permits to be issued so that she could immediately start building , for completion this coming season.  And due to her amazing fortitude and energy, that building will be completed in time for this season.  The rental season is booked and almost sold out, we in the Pines have been through much more than a fire in our lifetime, and everyone knows that life continues and they choose to come to the Pines for just that reason.  Pines Commercial Ventures, the owner of the Pavilion, had the luxury of their other venues, the Botel, the Blue Whale and the pool area and the Canteen, so that they are able to operate on schedule and still take the time to have new drawings and plans for the new Pavilion.  So yes, Fire Island Pines will be ready for this coming season with many options for all of us to enjoy this season.  No one has to rely on a water taxi to take them to the Grove, we will have enough for everyone to remain entertained in the Pines.  Let’s not forget we have the most beautiful beach in the world.  But I’d also like to say that every owner of the commercial properties has had their share of rumor and criticism on every blog or , in the days of John Whyte, every gossip column.  John Whyte was criticized constantly, until he died and became a Pines legendary hero, embraced and respected and beloved.  Eric Von Kuersteiner who literally brought the Pines back with a whole new younger generation, was criticized, ridiculed and gossiped about until he sold to Seth, Andrew and Matt.   Now it’s Seth, Andrew and Matt’s turn, All owners have very thick skins and all of them have one thing in common, they love the Pines and they would not have bought this amazing property if they did not love our community, for runninig these properties are a life changing profession, and unfortunately under the scrutiny of every homeowner, every renter, every day tripper, every guest and every friend of the above, who all give their two cents and love to gossip, whether it be good or bad, because they all feel that they own a piece of our heaven on earth.  Jon Wilner

    Reply
    1. Gilscastles

      Thank you John for setting the record straight, everyne is a critic but only a few actually roll up their sleeves and get things done. People make the Pines what it is and there is a bumper crop of beautiful houses and the remaining Pines Ventures properties for everyone to party in and soon a new Danikki Building as well. We will have fun where ever we are in the Pines this summer. Frankly I am kind of glad to not be hurded from one venue to another 3 times a night it woudl be nice to start the blenders running daily and let them roll till last call in one spot.

      Reply
    2. beidaren

      but you didn’t say a word if any of the rumors was false. You are just offering your opinions that are not relevant to the cantral story of this blogpost.

      Reply
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  15. beidaren

    How about starting with having Tonic water at Saturday evening tea? We went to have a drink today at 7pm at Blue whale and they did not have tonic water to make vodka and tonic!

    Reply
  16. Jonwred

    This is the very first time that they opened the Blue Whale for tea dance in April since it was built in 1959. Sorry you didn’t get tonic and sorry you feel that what others write are not relevant. If you want to criticize instead of enjoying your first weekend in the Pines with this glorious weather and the fact that everyone is so happy to be here especially since everything in town is open to welcome you, then revel in your negativity.

    Reply
    1. beidaren

      i was using the lack of Tonic Water to illustrate the incompetency of the current owners/managment.  the investors want return on their investment without customer services, not gona happen. 

      Reply
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