Unicorp, Colony owners consider plan that could end litigation

Could the end of litigation surrounding the shuttered Colony Beach & Tennis Resort be near?

The Colony Beach & Tennis Resort Association’s board will hold a telephone meeting Wednesday night to discuss negotiating a development agreement with Orlando-based Unicorp National Development that will “end all remaining litigation and finally put us on a firm path to redeveloping the Colony” if unit owners approve it, according to an email association President Jay Yablon sent to unit owners Friday.

The offer includes a global settlement of litigation between the association, Unicorp and Colony Lender LLC, which owns a 95% interest in a 2.3-acre recreational property at the 237-unit resort. Unicorp is under contract to purchase Colony Lender’s resort assets.

Unicorp's proposal includes $31 million in compensation for unit owners. Most owners would receive $130,800 per unit, although owners of 15 midrise units would each receive an extra $100,000, and owners of 13 beachfront units would each receive an additional $200,000.

The company would also pay approximately $15.2 million to satisfy unit owners’ loans and pay for real estate taxes, insurance and other obligations.

Unicorp seeks to build a 360-unit project with 180 condos and 180 hotel rooms.

The association needs at least 80% of the resort’s unit owners to support the development proposal, the threshold required by Florida statutes to dissolve the condominium association.

Yablon told the Longboat Observer Monday that the association seeks to hold a unit owner vote in 90 to 120 days.

But obtaining unit owner approval isn’t the only hurdle the project faces.

Because the Colony’s 237 units were built on 18 acres before the town created its tourism resort commercial classification that allows for just six units per acre, 129 of the resort’s 237 units are considered grandfathered, or legally nonconforming. If that grandfathered use disappears, only 108 units would be legally allowed on the property.

That means the town’s electorate must approve additional units via a referendum.

A timeline included in the presentation states that Unicorp will submit an application to the town within four months of obtaining unit owner approval. It seeks to hold a referendum between November 2016 and March 2017.

If voters approve the referendum, it seeks to break ground by Thanksgiving in 2017 and open the resort between fall 2019 and spring 2020.

The board has been negotiating with Unicorp President Chuck Whittall since December, when it considered a proposal from both Whittall and a second proposal from Manfred Welfonder, principal of Longboat Key-based MW Development Group and Naples-based The Lutgert Cos.

In 2014, Whittall sent demand letters to unit owners warning them they could face liabilities of more than $42.3 million stemming from a long-disputed lease of the recreational property and offering $20,000 per unit and a waiver of liability.

Colony Lender then sued unit owners for $5.1 million for unpaid rent and real estate taxes going back to October 2008.

U.S. Bankruptcy Judge K. Rodney May sanctioned both Unicorp and Colony Lender in April 2015, after ruling that their actions violated an automatic bankruptcy stay.

Unicorp’s proposal to unit owners acknowledges past disputes, stating:

“It never is and never has been the desire of our company to be in litigation. We always try to be good community partners. So let me first say I apologize to all for the bumpy paths we have had to reluctantly endure. Nevertheless, it is time to move on and join efforts to create a World Class 5 Star resort destination that will make us all proud.”

Despite the past acrimony, Yablon said unit owner reaction to Unicorp’s proposal has been positive.

“Yes, there’s a history with Unicorp, but in September 2014, they were offering $20,000, and now they’re offering $130,000,” Yablon said.

Yablon described the association as “cautiously optimistic.”

“We expect to be putting a lot of effort in these next couple of months to finally put together documents that will put an end to more than 10 years of fighting, expense and uncertainty at the Colony,” he said.

For the full story, pick up the March 3 edition of the Longboat Observer.