The Colony Beach & Tennis Resort Association and longtime Colony owner Dr. Murray “Murf” Klauber signed an agreement Wednesday that will give Klauber $3 million over five years through a “Klauber Family Consulting Agreement.”
The settlement, which a U.S. bankruptcy trustee has also signed, doles out $5.3 million in total to settle more than $25 million in potential legal liabilities, wipes clean all of the legal issues with Klauber and the Association and transfers all of Klauber’s Colony property (which is still subject to liens) to the Association. As part of the settlement, Klauber agreed not to pursue the $25 million judgement he received in a bankruptcy appeals court.
The settlement, signed Wednesday night by the Association and filed with Tampa-based U.S. bankruptcy Judge K. Rodney May's office this afternoon, doesn’t involve Colony Lender LLC. Colony Lender owns bank loans on Klauber’s property and is seeking to foreclose and get paid more than $13 million. Klauber’s property is still subject to the liens that Colony Lender has placed on the property.
Colony Lender and the Association still have to come to terms on an agreement, whether that involves an agreed upon monetary amount or the Association agreeing to hand over the three acres of property that sit in the middle of the property.
The settlement states that Colony Lender “shall receive either a cash payment for their property or such other consideration agreed to by the Association, the development partner and Colony Lender.”
The properties to be transferred to the Association includes everything: Klauber’s shuttered restaurant and bar, tennis courts, buildings that housed businesses on the hotel site and other property.
The Klauber Family Consulting Agreement states “it’s intended to provide that a meaningful and continued relationship will exist with members of Dr. Klauber’s family to ensure the success of the project."
As part of the consulting agreement, Klauber and his daughter, longtime Colony general manager Katie Klauber Moulton, “agree to support and assist the Association with respect to all zoning and development approval with the town and will assist with the development partner in presentations to the town regarding a (future) project.”
The settlement also states “the Association will memorialize as an integral and permanent aspect of the resort, an appropriate recognition of the contribution of the Klauber family to the development and vision of the resort and the town of Longboat Key community.”
The settlement agrees to pay U.S. bankruptcy trustee William Maloney $2.3 million to pay affected creditors involved with the lingering Colony bankruptcy since the resort closed its doors in 2010.
The agreement asks May to approve the settlement within 60 days. Unit owners must also vote to approve the settlement within 60 days.
If unit owners and May approve the settlement, it will end a more than six-year legal battle between the Association and its longtime owner. All parties are set to review the settlement in May’s courtroom on Oct. 10.
Much work must be done, though, before the resort can be resurrected.
The settlement, Yablon said, is contingent upon a favorable vote of the Colony unit owners that will be held in November. The voting threshold for that vote — whether it’s a simple majority vote or a 75% majority vote — must be determined by condominium lawyers.
A development order with JHM Financial Group LLC, meanwhile, has not been signed yet. Klauber’s settlement cash over five years will be paid whether or not the Association picks a developer. So if a developer isn’t selected to pay the settlement costs, unit owners will be responsible for paying approximately $25,000 apiece to fund the settlements with Klauber and the trustee.
Yablon said Thursday he doesn’t think that’s a concern.
“It’s envisioned the developer will pick up the cost,” Yablon said. “At this time, we as an Association are making the determination we need to take control and reach this settlement now. This is a monumental first step that needed to be made.”
Moulton told the Longboat Observer the family “is pleased progress is being made.”
“There are still several hurdles before any settlement is final, but we remain very optimistic we will be able to achieve the global resolution we have all been working toward,” Moulton said.
Colony unit owner and board member Blake Fleetwood also expressed optimism with the settlement Thursday.
“After six or seven years of having our hands tied in legality, we’ve signed an agreement that could get rid of all of our legal problems with Klauber,” Fleetwood said. “If this is approved, it’s that first big step we needed and we will finally have a chance to start doing real work at the Colony.”
Contact Kurt Schultheis at [email protected].