Colony keeps unravelling
Editor & Publisher
The redevelopment of Longboat Key’s Colony Beach & Tennis Resort is in the midst of yet another setback with the Association of unit owners and the chosen developer — Club Holdings, LLC — ready to part ways.
Club holdings expressed a desire to either walk away from the redevelopment project or negotiate another contract, but the arrangement appears to not be working for either party.
Association President Jay Yablon spoke with Longboat Key News on Friday.
“Every single person on Longboat Key has spewed out poison towards these guys (Club Holdings). Club Holdings cannot subsequently get this thing (The Colony) sold to investors. I can not give an investor a clear path.”
Yablon went on to say that while more than half of the Association’s nearly 250 members were happy with Club Holdings, he was not able to get the 75% agreement needed to enter in to a complete redevelopment contract.
The Association’s agreement with Club Holdings has a 45-day evaluation period where either party can assess and walk away from the whole relationship. Yablon said that date is May 15 and that is why the Board will meet on Monday, May 14 to either terminate the Club Holdings contract completely or renegotiate.
Yablon said Club Holdings simply couldn’t justify its direct involvement to investors anymore, but that the firm is willing “to stay on the sidelines and see what happens.”
For Colony Founder and former President Murf Klauber, the entire exercise has been costly and futile.
“The Association has spent well over $500K in the past year and they are nowhere. How can they spend money on Club Holdings without permission?” asked Klauber.
A divided house
Yablon said much of the difficulty is that various unit owners have strongly divergent attitudes as to what should be done with the property at this point. Yablon said there are some who do not want a new project but want to rehab the existing structures and keep the project as inexpensive as possible.
Others, said Yablon, merely want to sell the property — “but you cannot get everyone in the Association to sell their interest.” Yablon added. Yablon said he personally would like to see the Association move forward with a new partner.
To add to the already poignant drama, the fact that an Appeals Court judge sided with Klauber and instructed a lower court to award either $25,000,000 in total damages or return control of the property and the resort to Klauber along with $7,500,000 to the managing partnership and the responsibility for all deferred maintenance.
And that case is currently underway in U.S. Bankruptcy Court where U.S. Bankruptcy Court Judge Rodney May will hold three hearings on July 13.
One scenario is if a judgment was awarded to Klauber and the total liability placed on the unit owners exceeds the total value of those units, Klauber could place a lien on the various properties.
Yablon said, “That is clearly Klauber’s dream scenario.”
But Yablon added that if the judge were to move the case out of Chapter 7 back into Chapter 11 and award Klauber, the matter would be appealed instantly and it would take years to be resolved.
“So is Murf gonna take control and rehab the units?” asked Yablon rhetorically.
“Only thing that would do is make things even more toxic between the unit owners and Klauber,” he noted.
Meanwhile, longtime Colony unit owner Andy Adams has been busy buying up units. Yablon says Adams has acquired more than a 10% interest in the Colony through those units. He says that interest gives him 10% of the vote to determine any outcome and that Adams “almost has a veto over whatever we do.”
Sooner than later…
An issue the Town of Longboat Key has and will face is whether to continue grandfathering the zoning of the colony as a resort, which allows 252 units on property that would allow less than half that number today.
The Town, by law, allows a grandfathered use to continue only one year after that use has been abandoned. Last March, the Commission extended the grandfathering of the resort zoning of the Colony until the end of 2012. The only way it can continue past that date is if the Commission grants another extension, or the resort itself reopens.
The Commission made clear in March it would not grant an extension if the property disputes are not resolved. But some Colony unit owners’ are making a direct initiative to reopen and rehab themselves in an effort to preserve their rights.
Town Manager Dave Bullock told unit owners in a May 8 memo that numerous building code, fire code and other issues would need to be resolved before occupancy can be achieved.
Bullock also held a meeting April 25 with representatives from all of the concerned Town Departments as well as the Association to go over the various concerns and what corrective actions would need to be taken. Some of the issues include a 2008 report that states, “the buildings are in an extreme state of disrepair and some of the conditions may be a possible life/safety risk with regard to structural failure.”
Bullock wrote in his memo that he was advised by the Association’s property management firm that none of the issues noticed had been corrected yet. Bullock said all of the issues would have to be addressed and the units would have to pass a Town inspection before anything could open.
Many Town staff as well as some unit owners are concerned that a unit by unit rehab approach could lead to an even more disorganized mess than exists now and that any renovation or reconstruction must be achieved in a planned and integrated fashion.
The Colony has been closed since 2010 after a lengthy dispute between the Klauber family and the owner’s association. The Klauber family previously managed the 18-acre site for more than 40 years.
Club Holdings’ proposal to redevelop the Colony offered unit owners the option of whole ownership, one-eight fractional ownership or selling the unit.
Klauber laments that about five years ago he was only asking $45,000 to $50,000 per owner to perform a complete renovation of each unit. The cost now is going to be closer to $150K said Klauber.