Our View: 'The Andy Adams Colony'?

 

Our View: 'The Andy Adams Colony'?

 

Date: March 27, 2013
by: Observer Staff

 
 

 

 

What follows is not an April Fools’ joke.

To the contrary, it’s a serious moment of truth for the future of Longboat Key.

Although we made up the story in our April Fools’ pages of a Monster Truck Demolition Derby event to tear down the Colony Beach & Tennis Resort, in truth, the Colony unit owners are voting as we write this to rehabilitate, or to demolish and redevelop.

For the observers on the outside, who don’t own a Colony unit, there really is no debate. Common sense and everything Longboaters know and see of the conditions of the Colony’s structures say there is no way those dilapidated buildings could be rehabilitated and upgraded to re-create the Colony at the world-class level that it was in its prime.

There’s no way.

And that’s without even considering the regulatory nightmares that would arise to try to overcome the Federal Emergency Management Administration’s 50% rules.

Rehab those crumbling buildings? No way.

And yet, among the owners of the 237 units in the Colony Beach & Tennis Resort Association, there is passionate, intense debate over renovation or redevelopment.

There is also a looming uncertainty that Tennessee businessman Andy Adams, owner of nearly 50 units, will gain ownership control of the association and figure out a way eventually to become owner and developer of the future Colony.

Talk to association board members, and none of them is sure what Adams’ true intentions are. Some even wonder if Adams’ end game is to see the Colony become a luxury condominium property — no longer a resort.

Adams told us (see page 5A): “… My drive is to get the owners back into their beach houses and enjoy the Gulf of Mexico and Longboat Key as opposed to allowing the buildings deteriorate.”

He says he has had no “plan on the table” to convert the property to a luxury condominium.

Nonetheless, Adams wants more of the Colony than he already has. As we report on page 5A, he is offering to purchase any owner’s unit for $25,000 to $50,000 depending on its condition.

This is worth noting — for all other Colony unit owners and the Town Commission. Here’s why:

Adams needs to own 60 units to control more than 25% of association members’ votes, giving him veto power over any big decisions that require 75% ownership approval. Asked how many more units he wants to own, Adams told us there isn’t a goal.

As a member of the founding family and former CEO of National HealthCare Corp. and National Health Investors Inc., Adams has ample resources to purchase more units. According to proxy statements for the two public Tennessee-based companies, Adams and his family’s stock is worth $141.4 million.

These next few days are crucial.

For the past few weeks, the association board has been conducting a non-binding advisory poll of unit owners about which way to go. The results of this poll are expected to influence how the board will vote to proceed when it meets in early May.

The poll presented owners with essentially two options:

1) Staged rehabilitation of 15 of the 18 acres. This plan envisions the board assessing all owners about $36,000 for a first-phase rehab of common areas and rehabilitation of each unit’s exterior. Interior renovation is estimated to cost an additional $25,000 per unit if owners wanted new appliances.

The second stage — to bring the units up to present-day resort quality — is estimated to cost an additional $60,000 assessment. But this would require 75% approval from unit owners.

What’s more, according to a memo to unit owners, none of these estimates includes costs for mold remediation for the mid-rise resort building, legal settlements, recreation-land lease settlement, disability requirements, phone system, cable TV and water bills.

2) Redevelop/rebuild all 18 acres.

Two developers — Vanguard Land LLC and JHM Group — are under consideration, each offering unit owners options to sell their units outright or maintain fractional or full ownership. Specific dollars amounts were not presented in a recent memo to unit owners.

Vanguard Land’s proposal envisions increasing the Colony to 350 units. It wants to add 113 units from the town’s pool of 250 tourism units that Longboat voters approved for allocation about five years ago.

According to the memo to unit owners, a majority of the association board favors redevelopment over renovation. These board members are “not confident that a 15-acre staged rehabilitation would be successful and is not comfortable making an assessment compelling all owners to pay for the first-stage renovations, with no certainty that the second stage would proceed or succeed, or that this approach will yield the basis for a competitive resort.”

The unit owners’ deadline for responding to the poll was to be April 8. Jay Yablon, president of the association board, said the polling could close a few days sooner.

As you might expect with more than 230 unit owners, they have more than 230 opinions on how things should turn out. But one theme that surfaced in the association’s meetings in February is that most of the unit owners who spoke saw their Colony units as vacation getaways, not as permanent residences, nor as a real-estate investment intended to generate cash or big returns. They want their old Colony back, only in new condition.

Their wishes and desires could become moot, however, if Adams crosses the 60-unit threshold.

Given his behavior over the past few years of buying up units and at times seeking to become a developer of the new Colony, Adams indeed views the Colony as much more than a vacation getaway and place to play tennis, which he likes to do.

It’s an investment. He said it himself.

And investors typically like healthy returns.

Which makes many Colony units owners wonder if Adams is being totally forthcoming when he says all he wants is for them to be able to come back and enjoy the beach.

It’s Machiavellian to think Adams has ulterior motives. But it’s also plausible. Consider what outcome could occur:

If Adams is able to achieve the 25%-plus voting threshold, conceivably he could keep the association stymied from moving forward on a redevelopment.

That could trigger a drawn-out process of trying to assess all of the owners to renovate and bring the units up to code. You can envision this creating even more frustration among unit owners, compelling many of them to walk away or sell to Adams for whatever price he offers, eventually giving him 75% control.

All the while, the Town Commission’s frustration would continue to grow, pushing commissioners over the brink and voting to revoke the Colony’s resort densities.

Then what?

That would be up to Andy Adams, a savvy entrepreneur and CEO who has proven adept at building wealth and generating returns on his real-estate investments.


SIGN-GATE, the end
“Frankly, I think you owe me an apology,” said Longboat Key Vice Mayor David Brenner.

This was the vice mayor’s response to the editorial in this space last week in which we said “an apology would be good” to defeated Town Commission candidate Larry Grossman.

Grossman has been pressing for Brenner to resign or at least be censured for removing Grossman and Gene Jaleski campaign signs last month from the property along John Ringling Parkway (SR 789) on Lido Shores before the town election.

Brenner in no way believes an apology is necessary. He says he did nothing wrong; he says he did what the property owner asked him to do.

We failed — to find out and report the whole story.

After Grossman and Jaleski placed their signs next to those of Jim Brown, Phill Younger and Terry Gans on the private-property portion of the John Ringling shoulder, Brenner asked the property owner whether Grossman and Brenner obtained permission. The owner said no. Brenner says the owner asked him to remove the signs.

In hindsight, after it happened, that’s all he needed to say. Of course, even that, in all likelihood, would not have stopped the silliness that always accompanies the Silly Season — Longboat’s annual elections.

 

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