Delve into 12: The Colony

The Colony Beach & Tennis Resort was once so prominent it was known as Longboat Key’s Ellis Island — i.e., the place where many residents got their first glimpse of the new world that would become home.

But in August 2010, the historic resort closed as the result of a legal battle that stretched back to 2005 between longtime Colony owner Dr. Murray “Murf” Klauber and the Colony Beach & Tennis Association.

Here’s what hasn’t changed at the Colony in the past year: The property’s decay continues. The legal battle rages on. And the 232 units that were once filled with guests — many of whom went on to become Longboat Key homebuyers — remain empty.

And here’s what has changed: In July, U.S. District Judge Steven D. Merryday reversed key rulings made by U.S. Bankruptcy Judge K. Rodney May that ultimately gave unit owners control of their units. In October, Merryday ordered a bankruptcy court to determine damages for the partnership that ran the Colony, along with Klauber and other lessors of a recreational lease, while also ruling that the bankruptcy court judge could consider the Association’s counterclaims. Merryday also ordered the parties into mediation, which has not yet resulted in resolution. Another round of mediation is scheduled for Thursday, Jan. 5.

The Association is determined to move forward despite pending legal issues — even if moving forward requires it to develop the approximately 15 acres it controls around Klauber’s property.

The board has partnered with Club Holdings Venture LLC, a joint venture formed by the Broomfield, Colo.,-based Club Holdings LLC and the Windemere-based Miller Development Group, to redevelop the Colony. In December, the company held its first meet-and-greet with unit owners — 75% of whom need to approve of a plan for it to move forward — while also meeting with town staff for feedback. Club Holdings representatives estimated that the Colony could be functional again with an investment of two years — six months of permitting followed by a year-and-a-half of building — and $84 million.

Klauber, however, insists that the Association can’t move forward without his approval. In a Dec. 14 letter to Town Manager David Bullock, Klauber wrote that, according to town codes, the association cannot proceed with redevelopment without Klauber’s signature or an affidavit acknowledging his consent. Klauber said that he would be willing to move forward with a redevelopment plan irrespective of settling legal issues “provided that they present a plan I’m proud of for this island” and provided he receives “a decent buyout.”

But the town’s clock is ticking. The parties will have to present a progress report to the Longboat Key Town Commission in March as the result of a continuance granted by the commission in May to extend the town’s tourism abandonment requirement for the Colony to Dec. 31, 2012. (Without the extension, the property could have lost 85 of the resort’s units by Aug. 15, 2011 — exactly one year after the resort closed — because the units were built on the property before town code limited tourism units to six per acre.)

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