Developer/entrepreneur Randy Langley and businessman/lawyer David Siegal have a plan that more than $1 million in judges, lawyers and mediators have been unable to resolve in three years: how to restore the famed Colony Beach & Tennis Resort to its historic luster and make it a happy place where its owner and visionary, Dr. Murray “Murf” Klauber, and the Colony’s 232 unit owners exist in harmony.
“If everyone is reasonable, everyone can benefit,” says Siegal, punctuating the word “reasonable.”
Langley, owner of Longboat Key’s Cedars Tennis & Fitness Club Inc., and Siegal, a Longboat resident, emerged as new key players in the Colony saga. On Feb. 26, they purchased from Bank of America a mortgage on key pieces of Klauber-owned property at the resort — the tennis courts, the Colony restaurant, the swimming pool and Klauber’s penthouse office.
Katie Klauber Moulton, president and general manager of the Colony, said she has heard Langley and Siegel paid about $4.5 million on what amounts to about a $10 million note owed by the Colony and Klauber. Langley and Siegal declined to disclose the purchase price.
“We paid a sum we cannot disclose,” Siegal says.
Cannot or will not?
“It’s an understanding we have with the bank,” Siegal says.
Langley, 43, and Siegal, 59, under the corporate name of Colony Lender LLC, say they personally invested most of the equity to buy the loan, with an undisclosed amount also coming from family money. They say they’re the main partners.
Why they’re in it
Why get involved?
“Eighteen-and-a-half pristine acres,” Langley says. “It’s just beautiful.”
There are other motivations. “It (The Colony resort) needs to be brought back,” Langley says. Untold Longboaters started their lives at the Colony. “Everybody knows the Colony,” he says. “It’s an incubator for homebuyers.”
But Langley is also pragmatic: “I’m not a Joan of Arc. I expect to make a profit.”
Langley began thinking about the Colony last fall, after he met Klauber at a Longboat Key Town Commission meeting. They unsuccessfully argued against the town funding the construction of a $745,000 public tennis center check-in and clubhouse facility.
Afterward, Langley met with Klauber for lunch at the Colony’s Monkey Room and learned about the years-long dispute between Klauber and the board of directors of the Colony unit owners over who should pay what to renovate the deteriorating resort — a dispute that has failed in mediation and now is in federal bankruptcy court in Tampa.|
Langley went home, thinking: “Wow, this is really a messed-up situation.”
But having had about 12 years of experience as a residential developer who set up homeowners associations, Langley felt an allure — to the property and the challenge. In November, he gave Siegal, a Cedars Tennis member and one of Langley’s lawyers, a business plan to rescue the Colony.
Siegal, who describes himself as a businessman who practices law, read the plan on one of his weekly plane rides back to his law practice in Albany, N.Y., his hometown. That Tuesday, he told Langley: “I’m in, brother.”
The first step of the plan required them to get a seat at the negotiating table, and the best, easiest way was to buy Klauber’s loan from Bank of America.
That would give them credibility with all of the parties. Having invested $4 million or more of their money to buy the loan, they would have, as Siegal says, “skin in the game.”
“Through the investment we made, it’s not just conversation,” he says. They, like Klauber and the unit owners, have money and wealth at risk as well.
Unlike Bank of America, however, Siegal and Langley do not have time constraints on getting Klauber to satisfy his mortgage. As a public company operating under federal banking regulations, Bank of America was becoming increasingly pressured to complete foreclosure proceedings on Klauber’s overdue note. According to Siegal, a payment on the note hasn’t been made since December 2007.
Will they foreclose?
Likewise, Langley and Siegal could follow through on foreclosure also. A federal judge has put a hiatus on any foreclosure proceedings until May 11, but, even then, Langley and Siegal say forcing a foreclosure is not their first choice.
“We don’t want to roll over anybody,” Langley says. “That’s destructive. We don’t want that for anyone.”
With time to negotiate, Langley and Siegal have met at least three times with Klauber and Moulton.
Last Saturday, March 13, they met with Colony Association President Jay Yablon and two other members of the association board. “It was a good introductory meeting,” said Yablon, who declined to discuss details.
Langley and Siegal say their strategy is to find out what everyone wants, what’s the least each side would accept and figure out how to give them more.
Asked to reveal the details of how they see their plan resolving the dispute, predictably, Langley and Siegal decline. They don’t want to show their hand before it’s played. Langley, however, says his business plan was “structured all the way down to the nail.”
Moulton is hoping to see it before the Colony is to file an amended reorganization plan March 25 with the bankruptcy court.
For the next 56 days, Langley and Siegal likely will be conducting shuttle diplomacy. They have no idea whether they’ll be successful. But they’ve thought through some of the possible outcomes:
1. Satisfy the mortgage.
As a first step, Klauber could pay off the $10 million mortgage. Moulton says she and her father have been talking to three other well-qualified groups with cash in hand and similar desires of Langley and Siegal’s to see the Colony restored.
In that event, Langley and Siegal could walk away more than doubling their investment.
2. Proceed with foreclosure.
This could trigger several possible outcomes.
• If Langley and Siegal proceed to a courthouse foreclosure sale, they could sell the mortgage to another party just as Bank of America sold to them. If, say, a bidder offered $6 million for the $10 million note, Langley and Siegal could take the profit and walk away. Or they could reject it and retain the note.
• They also could hold out until a bidder pays the face value of the note. If, say, a bidder came in with the entire $10 million, Langley and Siegal would face the decision of either accepting the amount and walking away or bidding slightly higher to satisfy the mortgage and become owners of Klauber’s properties.
In the case of the latter, Langley and Siegal would need to come up with an estimated $6 million more.
3. Convert debt to equity.
Another option is to negotiate with Klauber and convert some or all of Klauber’s debt into partial or complete ownership of Klauber’s properties.
Asked if they want to be part owners with Klauber, Siegal says: “We have to be flexible on where the money comes out.
“We have a secure investment,” Siegal says. “We’re not worried about that at all. We’re hoping to accommodate the possibility of resolving everything plus rehabilitating the Colony.”
The two who want to fix the Colony
David Siegal and Randy Langley come from different backgrounds and create a partnership with yin and yang.
David Siegal and Randy Langley appear to have the yin and yang of good business partnerships.
Siegal, 59, is the reserved low-toned lawyer — careful, thoughtful with his words, analytical. Langley, 43, is bold, deep-voiced, quick with a quip, teeming with creative energy. Their personal and professional backgrounds are as yin and yang as their personalities.
+ David Siegal
Drawn to troubled businesses
David Siegal grew up in Albany, N.Y., in the shadow of his high-profile father, Herbert H. Siegal, who became a retail legend in the Northeast United States with his Cohoes Manufacturing Co.
Siegal proudly recounts his father’s pioneering as the original high-end, department-store discounter. Cohoes offered the same merchandise at the same time that it appeared on the shelves of Lord & Taylor and Macy’s — except 30% off.
The business — one store — grew to about $20 million in annual revenues in the 1970s, employed 400 people and attracted rich and famous as well as busloads of out-of-town shoppers. Siegal remembers one of the DuPont matriarchs shopping at his father’s store while she was in Saratoga in the summers, paying thousands of dollars for her merchandise on checks from the Federal Reserve Bank of Richmond. Siegal speaks proudly of his father, who offered customers free lunches in the company cafeteria.
A pilot, Siegal commutes weekly between Longboat Key and Albany. He has lived part time in Longboat Key since 1992, becoming a full-time resident two years ago. He currently resides at Beachwalk on the north end of Longboat Key in a three-bedroom, three-bath condominium that he and his wife purchased in 2006 for $1.5 million. Siegal has two grown children and a 10-year-old son who attends St. Stephens Episcopal School, in Bradenton.
Siegal graduated with a bachelor’s from the University of Rochester in 1972, earned accounting and tax degrees from the State University of New York-Albany and graduated cum laude in 1976 with his law degree from Albany Law School.
Since then, Siegal has been a businessman and lawyer in Albany, practicing family, divorce and business law. With partners, he has developed apartments and single-family homes and been an investor-owner of commercial real estate, mostly in the Albany area.
Siegal sees himself as more businessman than lawyer, but he is drawn to businesses that need issues resolved. A little over a year ago, Siegal inherited, through bankruptcy proceedings a Schenectady-based, dry-cleaning chain that operated out of one of the buildings he owned. He said he’s in the process of selling the chain.
The Colony is the kind of business challenge Siegal relishes. It makes him think of his father’s sage advice. “My dad is my moral compass,” Siegal says. “He always said any arrangement that is not equitable cannot last.”
+ Randy Langley
Though a native of Lakeland, Langley spent about 35 years in Clermont, west of Orlando, one of seven children.
Like Siegal, he too grew up in the shadows of a prominent father — Richard “Dick” Langley, a longtime Florida state senator. For Langley, his father’s position was a blessing and a curse.
It became a curse in 1990, when at the age of 23, Langley encountered the Florida criminal justice system, and, as he says now and as his father said then, his father’s public position resulted in Langley receiving stiff punishment from a judge who didn’t want to be perceived as giving a break to the son of a public figure (see accompanying story).
Langley spent three months in 1991 at a governor’s boot camp and was one of only three out of 38 who graduated.
“The best thing that ever happened to me was I got in trouble,” Langley told The Longboat Observer.
After boot camp, Langley re-entered the University of Central Florida and earned a degree in health administration. Instead of health care, however, Langley became an entrepreneur, developer, general contractor and landlord in Central Florida.
Langley started and operted more than 20 companies over the past 26 years. Most of them were companies associated with residential and commercial real-estate developments.
From the early 1990s through 2005, Langley scouted Central Florida for undeveloped properties in the outskirts of growing areas. His specialty became purchasing land and obtaining development entitlements. In some cases, he would sell the entitled properties to big home-building companies. In some instances, he would hold onto the land and sell parcels to builders.
“Everything I earned in one project I ploughed into the next one,” Langley says. “I made sport of it for about 12 years.”
In December 2005, he moved with his wife, Charlotta, an emergency-room physician at Sarasota Memorial Hospital, and their two sons from Clermont to Longboat Key. He paid $1.4 million for a 5,600-square-foot home at Land’s End on the northeast tip of Longboat Key.
Four months later, Langley and his mother, Mary C. Denison, purchased a one-bedroom condo on North Shore Road.
Then on May 1, 2008, Langley became more prominent on Longboat Key when he purchased the Cedars Tennis & Fitness Club from the Hunt Group for $1.05 million. Public records show that on the next day, Langley took out a mortgage for $1.25 million from a couple in Orlando, with whom Langley had done business over the previous decade.
Langley brought new energy and life to Cedars. He added a fitness center, remodeled the pro shop and reopened the restaurant. Operating the tennis courts also spurred Langley’s creativity. He hired a programmer to create an electronic, Web-based, court-reservation system. His idea produced a new company, Gotchatime (see gotchatime.com). A patent is pending.
Langley’s forward momentum at Cedars became interrupted in the summer of 2009. His neighbors at Cedars West sued him and his company, protesting Langley’s laying claim to two hard-surface tennis courts on the east side of Gulf of Mexico Drive.
That suit is ongoing, waiting for another round of mediation.
“When and if I win,” Langley says, “I’m going to stand up in court and tell them (the Cedars West representatives), ‘You’re welcome to use the courts for free.’ I’d just like them to buy their balls from my pro shop and drinks from the restaurant.”
The summer of 2009 brought another problem. JP Morgan Chase notified Langley of pending foreclosure action on his Land’s End home. He sold it last month for $800,000.
“I spent $100,000 a year on that place,” Langley says. “It was the worst purchase of property in my life. I’ve never lost money on a piece of property in my life.”
EDITORIAL: IS IT RELEVANT?
Randy Langley will tell you he has avoided the public spotlight intentionally for nearly the past 30 years. He knew attracting attention to himself would always dredge up the past.
When he and David Siegal became involved in the Colony Beach & Tennis Resort’s future, when they became involved in one of the most public and important institutions on Longboat Key, it reopened the past.
But is the past relevant?
Is Langley’s past of a quarter-century ago relevant to his business activities today?
We have wrestled with this question.
“You never quit paying,” Langley told us. “No matter what you do, it’s always there. I live with it.”
The “it” already surfaced. It surfaced when Langley purchased the Cedars Tennis & Fitness Club. A Cedars condominium board member brought it up at a meeting.
And Langley himself has told Dr. Murray “Murf” Klauber and his partner, Siegal. “Everybody I do business with knows about it before I do business,” Langley says.
The “it” is this: Langley was convicted in 1991, at age 24, for his involvement in a car-theft ring when he was 18 and 19.
In the courtroom on Jan. 22, 1991, according to the Orlando Sentinel, Langley told the judge and spectators his actions were the result of immaturity.
“God I wish I could go back,” he said. The Sentinel said Langley turned to the crowd, thanked everyone for coming and trying to help him and said, “I’m sorry I let you down.”
From that point on, and after his boot-camp experience, Langley stayed clean, except for two minor traffic tickets.
For the past 25 years, he worked as a real-estate entrepreneur — and succeeded.
When we informed Langley what research on his past revealed, he was unhesitatingly forthcoming.
“Everything I did, I admitted to, I paid for it, and I reimbursed for it — $172,000 in restitution,” he told us.
Langley says he believes our printing this information will kill his and Siegal’s attempts to rescue the Colony and bring agreement to the disputing parties.
“People of the world are not forgiving,” Langley says.
Langley’s partner, Siegal, says what Langley did at age 18 is irrelevant.
“He told me about it,” Siegal says. “He said, ‘I did something stupid when I was a kid.’ He was very forthright and honest. That’s the way he is.”
Added Siegal: “Has anyone ever filed a complaint against him as a developer? Nothing. Has he ever sued anybody? Nothing. Has anyone sued him for his business practices? Nothing. And that’s where I come down.”
Said Klauber: “He paid his dues.”
John Wild, president of the Cedars condominium board, told us: “The reaction of the board was that certainly was a stupid thing as a young man. But he has turned his life around and has brought tremendous value to this organization.”
You can argue what occurred 25 years ago is irrelevant. You can also argue that knowing what Langley did and what he accomplished since that time says even more about his character.
— Matt Walsh