2012 Year in Review — Colony chaos continues
In September of this year, the Colony Association requested double the amount of time it originally asked, for completing renovation of the Colony. The original request was an 18-month extension beyond the Dec. 31, 2012 deadline, which it then changed to a 36-month extension.
The Colony extension request was not granted to 36 months, but instead to 12 months.
The town commission had to determine whether to extend the Dec. 31, 2012 abandonment period of the Colony. If the commission had not extended the Dec. 31 deadline, the Colony would have reverted back to its former zoning of 6 units per acre, thereby losing its current 237 grandfathered units, and instead allowed to have approximately 90 – 100 units.
The town commission also imposed conditions to reduce the rat and pest population and to ensure that landscaping is maintained. Neighboring condominium owners such as those at the Aquarius, had also expressed health concerns associated with the abandoned property, as rats and mice have been spotted inhabiting the structures.
Also in September, the engineering company hired by Citizens Property Insurance deemed the five-story central tower unsafe for anyone to enter, as one of the central beams on the fifth floor is corroded and falling downward.
In October, the town adopted Resolution 2012-07 which requires that the Colony maintain vermin and pest control programs reviewed and approved by the town, secure all unsafe buildings and stairways, and restore and maintain the landscaping and irrigation on the property that is visible to the public and neighbors; and the Association had 30 days to comply.
Colony Association President Jay Yablon has assured the town and neighboring Aquarius residents that the is willing to work with them on all of the problems associated with the Colony’s abandoned state, including vermin and decaying buildings. Yablon also stated that the Association is working with the town to resolve the five-story tower structural issue, as well as any structural problems in the surrounding buildings.
After the Colony Association was granted a 12-month extension in September, the Colony by November was still non-compliant with several code violations.
In a letter from Town Manager David Bullock to Colony Beach and Tennis Association Treasurer Robert Erazmus dated Nov. 28, Bullock reminded the Association that they were not maintaining the property as required by the town.
Planning and Building Director Robin Meyer visited the Colony on Nov. 12, and wrote a subsequent letter to Bullock listing all of the code violations that the Association would need to remedy.
Among the code violations were unused and exposed irrigation, flowerbed areas to the north and south of the entrance that need to be weeded and mulched, and a center island bed needs to have replacement plants and mulch.
Another violation Meyer listed are doorways that have been broken open or glass windows that have been broken, allowing unrestricted access, and the possibility of pests within the units as well as open storage areas. Also, the support beam in the mid-rise center tower is still structurally unsound, according to town officials.
Longboat Key Building Official Wayne Thorne said the Colony is still structurally deficient, and they can’t approve the building permit as they are waiting for the Colony’s engineering report.
The terms of the resolution
At the October regular meeting, the town commission adopted Resolution 2012-07 which granted an extension for saving the amount of Colony units until Dec. 31, 2013. A final determination has to be made by that time regarding who legally controls the Colony, including the entire site composed of the units, the restaurant, tennis courts, mid-rise building, and outparcels.
Within 90 days after the determination of who controls the Colony, the controlling party must submit a complete redevelopment plan for re-opening the Colony. Once the plan is approved by the Town Manager, an additional extension will be granted for 36 months from the date of plan approval if the plan is to construct all, or substantially all, new buildings. If the plan is to renovate and reopen the existing buildings, the additional extension shall be for 12 months from the date of plan approval. The commission, however, made it clear that it vastly prefers a newly built Colony rather than a renovation and the time frames support that initiative.
The resolution, as mentioned above, also addresses the vermin and visual blight issues that have offended the neighbors at the Aquarius condominium as well as commissioners who have expressed concern over the lack of attention placed on keeping the property in order and preventing the visual decay of the site from encroaching on the rest of the well-manicured key.
When the resolution was adopted, the Colony parties had 30 days to maintain vermin and pests, secure all unsafe buildings and stairways, restore and maintain landscaping and irrigation visible to neighbors. To make sure these conditions are met, the town required a $50,000 cash bond from the Association, so that if the Association did not get the work done, the town could hire someone who would.
Klauber’s $25 milion award
Also in October, Colony founder and former Chairman Dr. Murray “Murf” Klauber and the limited partners were awarded a total of almost $25 million in a U.S. Bankruptcy Court proceeding in damages to be paid by the Association of Unit Owners. The award amounts to an obligation of more than $100,000 per unit to be paid over five years.
Judge Rodney May followed the instructions of U.S. District Court Judge Steven Merryday, May’s superior, who ruled last year that May had erred and ordered May to reverse his rulings and award Klauber and the General Partners, which Klauber controlled, extensive damages for the Association of Unit Owners failure to pay for renovations which led to the shuddering of the once-internationally renowned resort.
May was given two options by the superior court judge to consider at the hearing: award Klauber the total damages of nearly $25 million, or award Klauber about $7 million in damages and return control of the units to Klauber and the General Partner. May said he was going to decline returning control of the units to Klauber.
May said returning control of the Colony to Klauber and the General Partnership was not feasible due to several factors including that the unit owners hold warranty deeds to their properties. He also said the General Partner and Klauber are in Chapter 7 liquidation and the partnership could not comply with articles of the management agreement. He also said the trustee was not able to successfully take the General Partner into Chapter 11 was another reason.
That is when May said he was bound to comply with the instructions of the superior court, which found that the Association of Unit Owners are responsible for the repairs and the assessments to repair. He then awarded what he called the beginning claim of $20,646,312 in damages to be paid by the unit owners to Klauber and the General Partner.
Colony Association of Unit Owners President Jay Yablon said the award was unfortunate, but expected, and that between giving back control or keeping control, the Association vastly preferred keeping control.
May had also reconsidered his prior ruling and found that the Association of Unit Owners is not entitled to any offsets or counterclaims against Klauber or the General Partner.
The Association claimed damages due to loss of use of the units and a fundamental argument that it was Klauber’s actions that caused his own damages. The judge said even if true, there is no discernable or demonstrated way to assess those claims. He then denied all counterclaims and offsets.
Another award May granted is for the Association of Unit Owners violating the Recreational Lease at the Colony. That lease created a contract for use of the tennis facilities and recreational facilities at the Resort. The damages awarded by May to the four Recreation Lease interests was $2,223,391.71.
Judge May said an additional $2 million was also awarded in pre-petition expenses incurred by Klauber and the General Partner for expenses paid on the Association’s behalf before the lawsuits were filed.
Klauber said his goal is to help bring the Colony back to life.
As it stands, the award is ordered to be paid over five years at 6 percent interest.
The award simply is for damages and recreation lease payments. The unit owners will still be responsible for all costs associated with renovating or redeveloping their units.
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