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Can Andy Adams be shamed into selling his Colony units or will the courts decide?

STEVE REID
Editor & Publisher
sreid@lbknews.com

Shirley Jackson’s great American short story, “The Lottery,” has twisted and morphed and found a replay at the Colony Beach and Tennis Resort.

Instead of 300 local villagers each grabbing a stone and aiming at Tessie Hutchinson, numerous unit owners, Unicorp President Chuck Whittall and Colony Board Members are flailing linguistically at Andy Adams. Adams owns about 1/3 of the Colony units and he is fast becoming identified as the immovable obstacle. If money does not compel him to sell, maybe a speedball of shame, litigation and diminishing offers will work.

 

Bleak House

It all comes down to goals, aspirations and valuations.

After all, to transform the decrepit and termite infested Colony into the St. Regis Hotel and Residences, Adams must be overcome.

Not a scintilla of cement can be poured into the future form that the Longboat Town Commission approved for the site until all of the ownership is consolidated. And the difficulty in gaining control of the Colony is reminiscent of the struggles to define the amorphous landmass we know as Poland with rights and claims and families twisted through years of occupation and shifting boundaries.

In short, Adams must be negotiated out of existence through agreeing to sell his units to Whittall, or, he must be overcome through the courts in a forced termination of the condominium. That act is the most paternalistic approach. In a termination, the affected parties are asking a judge to agree that an impasse has been reached and he must divide the sloppy pie in an equitable manner. It could go to auction. It could be appealed.

Whittall has offered Adams more than $22 million for the 76 units that Adams owns. I have been told Adams wants far more — likely in the $30 million range.

When it comes to return on investment, Adams has spent between $7 million and $8 million to buy the units he owns. In basic terms, he has turned down a 300% return on investment.

In comparison, Whittall will likely spend about $50 million of his company’s money and finance the remainder through sales, presales and lending to develop the resort and condominiums. He stands to make back $150 million if all of his development assumptions come true. Those assumptions are that the residential units will sell between $5 million and $10 million. So in the same rustic math, Whittall stands to make 300% on his investment — the same as Adams was offered.

But this is where ordinary business sense turns into something bleaker, something all too human.

 

The Eve of Adams

More than 15 years ago, when Murf Klauber was in firm control of the Colony, Adams made a simple request and it had to do with rights and privileges.

The rule of Colony ownership was you bought a unit and Klauber had the right to rent it out 11 months out of the year. He kept the proceeds, paid the expenses and taxes and if there was money left over, you received a disbursement. There was rarely or never money left over.

What the unit owners did receive was 30 days in their unit and no carrying costs. It was the highlight of families and generations who stayed for that magical month. If you visited with children, the children would play at the various camp programs while adults could carouse, cavort, play tennis, drink and dine all the while treated to an atmosphere that was alternately invigorating, relaxing and elegant. But Adams wanted something more.

 

Faulty Towers

To understand the dynamics of today, one must go back to that time 15 years ago and focus on the mid-rise building — the tallest structure at the Colony.

From the mid-rise Klauber ran the operation like a benevolent dictator with his Sperry Topsiders, snug white shorts and shirts that even a Fauvist on LSD could not envision. Murf’s office was on the top floor and he lived in the expansive condo below. His world was a tapestry of friends he sold units to and he knew each by name. The Colony reflected Murf’s predilections — a pastiche of photo memorabilia, statues and paintings, the beach and his arsenal of business plans adorning an informal boardroom. Murf walked the beach, watched the tennis players and cajoled the operation. Add to that he raised his family on site and his daughter, Katie, also breathed life and energy into the operation.

Adams bought two units just below Klauber in the mid-rise. He watched Klauber and watched the sandy empire from a vantage point firmly below the world of Klauber. One day, Adams asked Murf if he could join his two units and expand his right to occupy the units beyond the 30-day agreement. He was told “No” by Klauber in far more colorful and emphatic language.

It was following this denial that Adams joined the Board of Colony Unit Owners, soon became president and helped lead the Association into bankruptcy. That was a strategy. In bankruptcy, the Association and unit owners could be insulated from paying any and all assessments to Klauber, the manager. It also guaranteed the Colony’s demise.

Klauber had demanded an assessment of $50,000 per unit owner for extensive maintenance issues and damage from time, weather and storms. The Association fought back, accused Klauber of mismanagement and dozens of other mortal sins and as Yeats wrote in The Second Coming,

“Things fall apart; the centre cannot hold;

Mere anarchy is loosed upon the world,

The blood-dimmed tide is loosed, and everywhere

The ceremony of innocence is drowned;

The best lack all conviction, while the worst

Are full of passionate intensity.”

Soon the lawsuits erupted and in short order the Colony limped to a close. Klauber held a few final Wednesday night spaghetti buffets, which served as the Colony’s Last Supper. And then it died.

After the Colony closed, three forms of scavengers arrived: the attorneys, the let-me-buy-your-closed-unit-cheap opportunists and the literal termites and rats. They all chomped away at the Colony assets for years. The rats drove the neighbors to complain and put out rounds of poison and traps. The unit buying was led by Adams who ended up buying more than 1/3 of all of the total 237 units of the Colony — at a discounted out-of-business price. The attorneys did what they always do: avoided reconciliation and painted victory just around the corner in their client’s minds.

To create the bitterest irony possible, Adams bought Murf’s mid-rise residential unit after it was foreclosed upon by Northern Trust.

 

Time laps on

All of Murf Klauber’s assets were eventually sold.

Murf, dignity intact, knowing he created the experiences that form many of Longboat Key’s favorite memories, lives on with his white shorts, Topsiders and pallet of bright shirts at the Player’s Club with his wife.

But for the rest of the Colony owners, for Andy Adams and especially for Chuck Whittall, the frustration and blame and attribution for nothing moving forward is mounting.

And just as Andy Adams stood front and center 10 years ago leading the tribe of unit owners away from Klauber, he is now the rarely seen target receiving the blame for standing in the way of the majority of owners and Unicorp and anyone who wants to see the St. Regis Resort rise.

The Colony Association President Jay Yablon wrote two days ago to all of the unit owners, including Adams, that the greed of four or five holdouts is holding up the ability for 150 other owners to move on and for the site to be rebuilt.

Yablon wrote, “…So the clock is now ticking. Everyone who wants out is less than two weeks away from a full price payday if Adams gets on board.  Every day that goes by with Andy Adams continuing to hold out for an obscenely disproportionate benefit is one day more that all the other owners will wait to get paid full price, one more day they are accruing assessments, and if their interest is not in the money but in getting back to the Colony property, one less day that they will be able to do so.

Andy, it is time. As the developer selected by 8 of 9 Board members and joined by almost all unit owners except you, Chuck has called your hand.  As President of the Association, I am also calling your hand.”

A long quote, but it shows the usually demure and diplomatic Yablon dramatically increasing the pressure on Adams. Next, Unicorp President Chuck Whittall weighed in with a letter of his own to the unit owners, including Adams.

Whittall wrote, ”There will never be enough to satisfy these holdouts. Because enough is never enough.  Luckily society as a whole will judge and recognize this and we can get relief.  Hence the termination suit for equitable relief.

Soon enough we will be in front of a magistrate and he will see the situation for what it is and put an end to this madness and the greed in front of us will be met with fairness and they will get a fraction of their bounty they seek. But it will be fair to all.

So I say to all the owners who have joined. The 150 of you. Not the 4-5 holdouts.  Stand with me and I will pay for the entire cost of this legal battle. It may take a bit of time. Not too long. But it will be worth the good fight to win and not see the few take advantage of the many. I promise you we will prevail and then we can drink Bloody Mary’s and celebrate together.“

 

Peyton Place

Will Adams respond to the slings and arrows? Will Adams take $22 million that Whittall had offered? That offer may now be off the table.

Is Adams reeling from all of the pressure like Tessie in the Lottery?

Likely Adams is immune to words and postures. Perhaps his goal is to push for failure and further devaluation of the assets. In the end, the value of the 17.3 acres on the Gulf is the land and the development rights.

Now that the development rights are in hand we will see more and more of this pressure cooker atmosphere.

It is hard to gauge staying power on Longboat Key when it comes to the Colony. The resources of Adams and Whittall are considerable. The patience of the community and the Town is short.

As one spectator said of the Colony and Longboat Key: It is our version of Peyton Place — sadly with very little sex to add spice to this endless drama.

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2 Responses for “Can Andy Adams be shamed into selling his Colony units or will the courts decide?”

  1. Sam says:

    Thanks Steve and Salvatore: Interesting history that I was not aware of. Basically, sounds like Adams lead the Association down a road to disaster for unit owners and the entire island. Huge costs and loss of enjoyment for the unit owners, huge loss of tax revenue to the city, lost sales to island businesses, and embarrassment and blight for the entire island. And now he’s trying to hold the entire island hostage for personal profit. Sounds like a terrific guy.

  2. Salvatore J Zizza says:

    Excellent article and rather accurate. I was the President of the Association prior to Andy Adams and our Board approved the $42,000 assessment, but unfortunately it was turned down by the Unit owners twice in 2005 & 2006, at which point I decided to resign from the Board and wrote a letter to the owners predicting unfortunately correctly what was being contemplated by the new Board would result in a long and ardous process of bankruptcy. The decision which was taken to take the Bankruptcy route has cost each Unit owner more than the $42,000 and no use of the Resort. Brilliant decision.

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