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Colony consolidation dominates courtroom as ownership battle continues into 2020

The operation and control of the once famous Colony Beach & Tennis Resort unraveled over years — first out of court, and then in perpetual litigation.

The Colony, once firmly controlled by Chairman Murf Klauber, has gone through countless legal undulations, various redevelopment proposals and yet over the past four years, one outcome has emerged — Unicorp has gained control of the property; with one major exception.

Unicorp President Chuck Whittall is closing in on both ownership consolidation and a plan to redevelop the property into a St. Regis Hotel & Residences.

After the Colony collapsed, Andy Adams purchased 70 plus units, which effectively gave him the ability to block votes for redevelopment and/or consolidation by the Association of Unit Owners. Adams is now the only person in Whittall’s way.

The litigation in 2019 and continuing into 2020 goes to the heart of how to reach a final valuation of what a former Colony unit is worth and how to use the courts to forge a legal path to considation of ownership.

In the backdrop is the approval granted to Unicorp by the Town of Longboat Key to build a 166-room St. Regis Hotel along with 78 condominiums. The approval by the town is contingent on Whittall obtaining complete ownership of the site. To that end, Whittall has been in court over the past year with a Judge agreeing that the Colony Association must be dissolved and that the final act, which is pending, is to decide how to value each and every one of the former Colony units.

Other than Adams’ 74 units, Whittall owns more than 40 units outright and has a contract for the remainder of the 237 original units that existed at the Colony.

Because Adams and Whittall have not been able to come to terms, Sarasota Circuit Court Judge Hunter Carroll will soon decide if the units should all go to auction with the highest bidder for the totality of the units claiming ownership.

That method inures a bidding advantage to Whittall because of a specific performance clause in his contract to purchase the units, and will allow him to own a total of 158 units prior to any sale.

Whittall hopes to convince the Judge that a better basis for valuation already exists and that is the agreement he has with unit owners. His argument is that time is of the essence and any sale method that could render a divided property or does not consolidate ownership will further devalue and cost owners and himself as well as engender more litigation.

Adams has made clear that there should be a simple public auction of the units and at various times has both argued and intimated a desire to redevelop the property himself.

Additionally, Whittall owns 2.3 acres outright of the 17.2-acre property. If Adams or an outside entity were to prevail at an auction, that 2.3 acres exists like donut holes throughout the property and would not be included in the sale. Whittall bought that land from Colony Lender and the 2.3 acres sat under the commercial operations at the Colony including the spa, flower shop, restaurant, pool and dining room, as well as the tennis courts.

What’s next?

The courtroom battle will continue right away in January 2020 when the Judge will consider the issue of whether the property can be legally divided. That trial is scheduled for Jan. 26 and Jan. 27.

The town has treated the property both when operated under Murf Klauber and in the application approved for redevelopment as a St. Regis Resort as a single entity and parcel. The underlying zoning is six units per acre, but the entitlements and the operation as a resort as well as the contract Whittall has with the unit owners is all predicated on it being an integrated piece of real estate.

Unless the issue is resolved in late January, which seems unlikely given the complexity and various arguments, both sides expect Judge Carroll to decide on a sale methodology following court hearings in April 2020.

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Longboat Key News

1 Response for “Colony consolidation dominates courtroom as ownership battle continues into 2020”

  1. Susan Bassett-Klauber says:

    Since day 1 you have grasped the complexity succinctly …..best reporting ever!

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