Good ol’ boy bets on dream
MIKE ADKINSON is a chain-smoking, fast-talking multimillionaire in sneakers and a golf shirt. If there were a World Series of Real Estate Gamblers, he’d be a serious contender.
Adkinson, 58, has known boom and bust, wealth and want. He has managed the Texas investments of Kuwaiti royalty and built thousands of homes in Florida. He has spent time in jail over a savings and loan scandal, won an appeal and walked free.
And here he was on a recent weekday morning, speeding in a cherry-red SUV across a stretch of scraggly pine forest in Stone County, Miss., 25 miles north of the Gulf of Mexico.
Those 25 miles once relegated Stone County to boondocks status. Today, however -- with Hurricane Katrina still fresh in the minds of Mississippians -- Adkinson is betting it’s a hot property.
He imagines a new city here for the estimated 72,000 storm victims still scattered across the state in government trailers. He imagines them living in good, modest homes in the safety of the piney woods. He imagines many of them commuting to the jammed casinos that remain anchored, by state law, to the perilous coast, where housing is still hard to find.
“If we don’t do something out here,” Adkinson said, gesturing at the trees with his Marlboro Light, “nothing’s going to get done.”
Adkinson and his partner, Robert T. Windham, have bought 11,000 acres in Stone County, with 12,000 more under contract. If they can get the pieces to fall in place -- clearing bureaucratic hurdles, obtaining environmental permits, securing a $150-million loan -- they will build 7,500 single-family homes and 10,000 apartments, along with retail space, parks and lakes.
The development, called Horizon, would be the state’s largest post-Katrina building project, and they are hoping it is just the beginning. If the demand is there, they say, they have the capacity to build a total of 110,000 homes, which could turn the tiny unincorporated hamlet of McHenry (population 1,260) into the largest city in Mississippi.
The plan is predicated on the idea that coastal living has become too frightening, difficult or expensive for many people, resulting in a dramatic post-Katrina population shift. Census figures show that the state’s three coastal counties suffered a net loss of more than 32,000 residents between July 2005, the month before the storm, and July 2006. The three counties to the north -- Stone, Pearl River and George -- picked up about 6,000 people.
“We’re beachfront property now, aren’t we?” chuckled Sandra Maniscalco of the Stone County Economic Development Partnership.
No one is sure whether the shift is permanent. But uncertainty is no deterrent to the mavericks and moguls who dare to gamble amid the ruin of South Mississippi.
ADKINSON grew up about two hours from the coast, in Petal, Miss. When he was a boy, his father abandoned the family; Adkinson learned the building trade as a teenager, working for his uncle, a general contractor.
Today, he is a big, blowzy man with a high school education and a deceptively casual demeanor. His booming, good ol’ boy voice can transform a complex development issue -- the finer points of a county tax code, for instance, or the workings of a wastewater plant -- into something as simple as a country sermon.
Adkinson says he lost everything -- millions in savings, a yacht, a Lamborghini, a helicopter -- when he was convicted in 1992 in a complex bank fraud case. Federal prosecutors accused him of defrauding two savings and loans that had lent him and other developers more than $100 million to buy 21,000 acres on the Florida Panhandle. Adkinson had planned to build a new city there -- Emerald City, it was to be called -- but it never materialized.
He was imprisoned in June 1992, released on appeal in January 1995. He returned to the Panhandle, picking up construction work with the welder’s certification he earned behind bars. It was hot, dirty work, but there was much of it to do: In October, Hurricane Opal touched down near Pensacola Beach, causing about $2 billion in damage along the Panhandle coast.
He kept fighting to clear his name. He kept telling himself, and anyone who would listen, the words that he knows are on the lips of every ex-convict. But it didn’t matter. He had to say to them: “I’m just not a criminal.”
In 1998, an Atlanta federal appeals court reversed his conviction. But to Adkinson, the real vindication came three years later, when the court, in a rare ruling, forced the federal government to pay his lawyer’s fees after determining that the case against him had been “vexatious, frivolous and taken in bad faith.”
Today, he keeps a copy of that ruling in his office for those inevitable moments when, in the course of business, he knows he has to explain himself.
As his case wound down, Adkinson reemerged as a major player in Florida real estate. In less than a dozen years, he went from flat broke to being worth, by his count, more than $200 million.
Adkinson said it flowed from a simple principle: Investors “could never, never go wrong buying property on the water,” he said. “Because they’re not making more.”
He faced tougher odds at the Biloxi, Miss., casinos, where he became a high-rolling regular. The slot machines, he said, were “almost like therapy.”
“It’s like tossing a coin -- there ain’t no skill to that,” he said. “But when you’re playing that button and watching things spin
After the storm, Mississippi’s casino executives turned to him for help. In January 2006, Adkinson spoke with Jake Vanderlei, vice president of gaming at the Beau Rivage casino. Vanderlei told him that the casino would be reopening in a few months, but employees were still living in trailers. Could Adkinson build something fast?
At the time, 38,000 government trailers were scattered across Mississippi, housing 100,000 residents. Some 70,000 homes had been destroyed, and few major developments were in the pipeline.
ADKINSON saw opportunity: Here, after all, was an unprecedented surge in demand and a dramatically diminished supply. So he and Windham began hunting for land near the coast. Adkinson said the area looked like a giant putty knife had scraped everything off the Earth, creating a blank canvas for developers.
In fact, the coast was riddled with complications. Owners were asking high prices for their lots, gambling that the casinos would buy them out. New federal flood rules required many houses to be built on 20-foot stilts. The partners learned that insurance for a two-bedroom apartment could be as high as $560 per month.
The partners looked north, a few miles from the beach, but still in coastal Harrison County. They considered opening mobile home parks, but were discouraged by county officials who told them they had enough trailers already. Much of the land was protected wetlands.
“I said, ‘Well, y’all have shut down any possibility for rebuilding along the coast,’ ” Adkinson said.
The search for property put the partners in daily contact with Mississippians who continued to live in desperate conditions. One evening, Adkinson described what he’d seen to his friend and lawyer, Dana Matthews.
Matthews noticed that Adkinson was crying. It was a rarity from a man who tended to work big deals with a poker face.
Making money is what brought Adkinson to the Mississippi Gulf Coast. But these days, he also talks about his work as a kind of succor for a scattered people.
“I started out wanting to make money,” he said. “But I’ve become really engrossed with helping these people.”
In the course of a few weeks, the partners’ plans had gone nowhere and cost them hundreds of thousands of dollars. Adkinson eventually realized that if he was going to help, he would have to deviate from the rule that had made him rich. He had to look beyond what most people considered coastal Mississippi.
Stone County is Harrison County’s northern neighbor, but it can seem like a world away. Here, the Creole, Roman Catholic and relatively urbane culture of the coast gives way to the more dominant rural and Protestant flavors that define the bulk of the state.
While the coast, pre-Katrina, grappled with issues of gambling and growth, Stone County, with 14,800 residents, stayed sleepy. When asked about the biggest issue they faced before the storm, Duncan Hatten, president of the board of supervisors, said they didn’t really have one.
In March, Adkinson and Windham learned that work was resuming on a new four-lane state highway that had been suspended after Katrina. Once completed, they estimated, it would connect commuters from southern Stone County to Biloxi’s Back Bay in about 18 minutes.
Windham drove to Stone County. The land was plentiful, with fewer wetlands. It was also a few hundred feet above sea level. Insurance was bound to be cheaper.
THE two moved fast, setting up a headquarters in the 31st-floor penthouse of the Imperial Palace casino, on Biloxi’s Back Bay. Windham began buying big lots and small ones. He bought them from big timber companies and old ladies and families that had been living there for generations. He bought quietly, hoping not to drive the price up, covering miles of dirt roads in his white Lexus sedan.
When the partners looked into regulations, they discovered that there were no impact fees for builders to pay, no building codes, no zoning.
“We weren’t required to do a cotton-pickin’ thing,” Adkinson said. “It was like building in a Third World country.”
They took their plans to the county supervisors anyway, hoping to win them over to avoid any conflicts down the road.
The locals were wary at first. So Adkinson spent months in private and public meetings, making his case. He explained his trouble with the law, handing out copies of the old court ruling.
He denied rumors that they were going to build a 50-story apartment tower, or that they were going to relocate thousands of poor, displaced residents from New Orleans’ 9th Ward.
“We told them we had deep roots in Mississippi, we weren’t carpetbaggers, and we were here to help,” Adkinson said.
Stone County’s annual budget is $9 million, so Adkinson and Windham promised to pay for all of the amenities of a new city: $50 million in schools, a sheriff’s substation, a firehouse, recreation fields, lakes -- even a county building department.
Adkinson has promised to make the homes attractive and affordable: the cheapest units, which will be modular homes, will probably sell for about $120,000. He expects Katrina victims to take advantage of the billions in federal grants meant to help them with down payments.
If a new map of south Mississippi really is emerging, Stone County’s politicians decided they were ready to embrace it.
“I’m as country as anybody who lives in Stone County,” said Hatten, 63, the board president. “I’d rather see it the way it was in 1964. But it’s not -- so why not take advantage of it?”
But how far north will the coastal people be willing to move?
Adkinson’s gamble really turns on that question. Another developer, Jim Frisby, is planning 5,750 houses, condos and apartments six miles from the beach. He thinks that gaming workers, with their moderate incomes, will not be able to afford the gas it takes to commute to Stone County.
The more pressing question for Adkinson is whether he’ll be approved for the $150-million loan. He is confident, but he knows other financiers have been touchy about his past.
He has already invested $20 million in the project; Windham is in for $10 million. As he waits for the bank to make its decision, Adkinson can sound like two men: one, a philanthropist; the other, the old gambler.
“Dammit,” the philanthropist says, “even if I lose money on this thing, I can still feel good.”
Says the gambler: “We’re either the smartest damn people in the world or we’re the stupidest.... There’s not a lot of gray area there.”
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Fausset was recently on assignment in Mississippi.
