We are in receipt of Mr. (Jay) Yablon’s letter dated April 28. Having also testified during the recent (bankruptcy court) proceeding, I provide below my own perspective of the position taken, which differs substantially from that of Mr. Yablon.
By way of background, I have been a Colony Beach & Tennis Resort guest for almost 40 years. I first drove into the beloved Colony with my parents and brothers in about 1970. After I married my wife, Suzanne, we continued the tradition. My two sons have now adopted the Colony as their own, forging long-term friendships with other young Colony guests from around the world. They fish together on the Colony pier, sail on the catamaran, swim in the pool and ocean, and, of course, share pizza and milkshakes while our adult gang is enjoying the fine dining or watching the sunset over wonderful wine.
We love Longboat Key and recently purchased a unit at The Water Club as well as at The Colony. We purchased at The Colony with the clear understanding that we were purchasing a unit in a “condominium resort hotel.” Our deed property description states, “Unit 102 Colony Beach and Tennis Club, a Condominium Resort Hotel”; our purchase agreement states, “Purchaser agrees to purchase Condominium Unit 102 in Colony Beach and Tennis Club, a Condominium Resort Hotel.” All related documents state the same language.
In addition to clear documentation on the matter, we firmly believe that most unit owners also want and reasonably expect all amenities that come with a resort hotel. However, we understand that the board is taking a very different position. The Longboat Observer states, “The Colony Beach & Tennis Resort Association is seeking to dissolve the resort and convert it completely to condominium buildings.”
In light of this, we must ask the following questions: Do the vast majority of owners agree that we should own in a condominium complex only with no resort hotel amenities? Has the board undertaken due diligence sufficient to support the apparent determination that a condominium complex — with no resort hotel amenities — is in the best interest of the owners? What financial analysis and modeling has the board done to justify its current course of action? Have we, as unit owners, voted on this significant lifestyle change and asset redeployment, and have the board members presented any viable plan to combine the condominium complex with a resort hotel and to renovate the properties?
The sole purpose and effort by the board appears to be centered on a conversion of the partnership to Chapter 7 liquidation. A conversion into Chapter 7 could prove devastating to (and contrary to the terms of) our investment and any real prospect of rebuilding The Colony family. A conversion to Chapter 7 would likely immediately shut down the hotel operation, thus providing no amenities of any sort for owners.
Creditors would scramble to attempt to receive some portion of the remaining assets. Many will likely be left with no hope of any settlement dollars. Longstanding, loyal vendors would likely receive no compensation for work performed or product or services provided. Tax liens would also need to be paid or passed on to others (hopefully not on the unit owners). The reputation, goodwill and brand of our partnership, association and resort would be shattered, with very little prospect for a return to vibrancy and family fun.
Town Manager Bruce St. Denis testified April 26, on the vital importance of maintaining a resort at The Colony due to the significant positive economic impact the tourist inflow has on the region. Mr. St. Denis asserted, “The Colony makes up about 40% of our tourist-development tax fees in Sarasota County alone, which are only paid to the town if people rent rooms on the island.” Again, it is my understanding that we, as unit owners, have never even held a vote on the critical question of whether to liquidate the resort, which would result in a set of extremely negative consequences and years of litigation.
Indeed, in their open letter April 30, the mortgage holders used language which clearly indicates to us that the condominium owners, through the association, may well face a claim for damages given the potential loss of the partnership’s right to use the condominium units for 335 days out of each year. “Then there is the use of the partnership’s right to the 335 days of occupancy of your units under the governing documents. If there is no amicable resolution reached, there will be years of litigation over this issue. We believe we have a $3.7 million security interest in those days, as did Bank of America. To protect our investment we cannot give up that right lightly.”
Furthermore, contrary to Mr. Yablon’s message, we should harbor no resentment for Messrs. (Randy) Langley and (David) Siegal. In fact, we should show appreciation and flexibility. They have put forth a credible plan and have taken a substantial capital risk in order to attempt to reinvigorate The Colony. And, we did note with interest that Dr. (Murf) Klauber has agreed to step aside as part of the plan proposed by Messrs. Langley and Siegal.
We also understand that, in recent months, other capable parties have also expressed interest and offered proposals. As a matter of interest, I understand that there is an alternative official plan which has been submitted to the court. This plan is apparently part of the recorded document lodged with the court as a component of the partnership’s reorganization efforts. It is crucial that the board, in its fiduciary role with the association, collaborate with the partnership and play a productive rather than destructive role in these potentially exciting opportunities. We must be part of the solution, rather than part of the problem. And, we, as owners, should insist on reviewing the best plans and voting on those we view as representative of the best interests of the owners.
There must be full transparency and democracy. And, there must be an open-minded, flexible, balanced representation for the owners going forward. As a former CEO of two major corporations during a 15-year tenure, I would be delighted to join a team/committee of unit owners who would review, process and present the best offers to all owners for ultimate votes on direction and decision. It is time to roll up our sleeves, work collaboratively and cooperatively with serious, interested parties and get our beloved Colony back to the wonderful tradition which we all value.
Gregory and Suzanne Rusovich are unit owners at The Colony Beach and Tennis Resort.