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Longboat Key Wednesday, Sep. 3, 2014 8 years ago

'Whatever it takes'

by: Robin Hartill Managing Editor

Chuck Whittall has never vacationed at the Colony Beach & Tennis Resort, sipped a cocktail in the Monkey Room or attended a beachfront wedding at the resort.

So, when he saw the shuttered Gulf-front resort a year and a half ago, he didn’t see fond memories, long-held grudges or seven years of litigation. He didn’t see its storied history or its colorful list of past guests that included President George W. Bush, Audrey Hepburn and O.J. Simpson. He saw opportunity.

“I never stayed there, never knew anything about the Klaubers,” Whittall said. “I looked at it as a blank slate.”

It was early 2013, and Whittall, president of Orlando-based Unicorp National Development, came to the Key in search of a waterfront residence for himself. (He purchased a unit at the Aria condominium that’s slated for completion in fall 2015.)

During one of his trips to the area, Whittall ran into an acquaintance, Morgan Bentley, who is one of about a dozen attorneys involved with the case, and told him he wanted to buy the property.

Bentley put Whittall in touch with Colony Lender principals David Siegal and Randy Langley, who own a 95% interest in the recreational property and 100% of Dr. Murray “Murf” Klauber’s former office and the restaurant complex, along with Andy Adams, who owns approximately 30% of units and the remaining 5% interest in the 2.3 acres.

Whittall stood out to Siegal among the myriad developers who have sought to redevelop the Colony.

“In the past, I felt that tire kickers were present,” Siegal said. “We needed a developer who has a checkbook. We need a developer who has stamina and can put up with strong personalities, not somebody who expects to be greeted with ‘Kumbaya’ and have flowers thrown at them, because that’s never going to happen at the Colony.”

Unicorp now has an agreement to purchase Colony Lender’s resort assets for an undisclosed price.
Both entities insist these assets include a 99-year recreational lease that expires in 2072 and that unit owners could be individually liable for more than $42.3 million (see Q&A, Page 1A).

It’s a claim the Colony Beach & Tennis Association hotly contests, arguing Colony Lender only owns real property at the resort and that the Florida Legislature outlawed such leases in 1975.

On Aug. 6, Whittall sent unit owners a letter offering them $20,000 cash or one of three other choices in exchange for the deeds to their unit and no future liability. Siegal followed up nine days later with a demand that unit owners pay more than $5.1 million for unpaid rent and real estate taxes for the period from October 2008 to present.

The next round of fighting will come Sept. 11, when Unicorp and Colony Lender file foreclosure suits against the resort’s 237 unit owners, save for the nine or so who have settled with him — a right they insist they have due to breach of the disputed lease.

On Oct. 2, U.S. Bankruptcy Judge K. Rodney May will hold a pre-trial hearing on a motion Chapter 7 Bankruptcy Trustee Douglas Menchise filed seeking sanctions against Colony Lender LLC for its assertions that it controls a recreational facilities lease violated a stay that attorney Michael Assaf, who represents Colony Lender and Unicorp, insists did not exist.

Whittall’s legal bill for July was $100,000; he says he has budgeted $35 million to $40 million cash in anticipation of at least another two or three years of litigation, although he is prepared for the “monster scenario” of five more years.

He counts Malcolm Gladwell’s “The Tipping Point” as one of the most influential books he ever read. He believes the tipping point in what May recently said is like “a Rubik’s cube, but someone squirted glue in the cracks.” That point will come when unit owners have to hire individual attorneys to defend themselves against the foreclosure.

He says he’s not in the business of buying problems, but he’s committed to redeveloping the Colony because if he doesn’t, someday, someone — possibly one of his competitors — will.

“Have you heard the story about when you have breakfast and you order ham and eggs?” Whittall said. “The chicken is involved, but the pig is committed. We’re the pig in this case. It’s whatever it takes.”

Driven to succeed
Whittall was 12 when he saw a man drive up in a Mercedes-Benz.

“How do I get that car?” he asked.

“Get into real estate,” the man replied.

By 18, Whittall earned enough from his entrepreneurial ventures to buy himself a Mercedes-Benz, although he now drives a Cadillac SUV, Aston Martin Vanquish and McLaren sports car.

His earliest business venture was a lawn service he started as a young teen.

“I knocked on every single door in the neighborhood and asked if I could cut their grass. Then, I got the next neighborhood and the next neighborhood. I was very, very busy. I bought more lawnmowers and hired a friend for the business,” he said.

Whittall spent no more than a year in college at Valencia Community College and the University of Central Florida. He started a stucco drywall business, then built custom homes and earned his general contractor’s license.

He founded Unicorp 18 years ago. Its first major account was Eckerd Drugs, which, in the late 1990s, contracted with Unicorp to build 120 freestanding Walgreens and Eckerd drug stores.

Whittall’s Unicorp owns 86 properties and has more than $500 million in ongoing construction projects. From a storage room at his headquarters, you can see the beginnings of the 425-foot observation wheel that’s part of Unicorp’s Orlando Eye project, a new shopping, dining and entertainment center. The project originally drew scrutiny, but the Orange County Commission unanimously approved it.

“We had Universal against us, we had SeaWorld against us, we had a huge number of homeowners against us,” Whittall said. “We fought and we fought and we fought and we fought.”

His company’s high-profile projects include the first two Trader Joe’s in Central Florida, the 115-acre mixed-use West Broad Village town center project in Richmond, Va., that received the 2011 National Pillars Award for best mixed-use project in the nation, the 613-room Wyndham Orlando Resort and the 130,000-square-foot Tuscany-inspired Dellagio mixed-use town center in Orlando, where Unicorp’s marble-floored corporate office is located. As with all of his projects, he was involved with even the minute details of its design.

“He knows every type of tree that’s out there,” said Amy Schuemann, director of leasing, referring to Dellagio’s landscaping. “He even picks out the trash cans.”

The Winter Park native says he built his company out of nothing more than drive and a desire to work hard. He prefers designer jeans and a button-down shirt to suits because he is frequently on construction sites. His office suite is equipped with a bar made from an antique boat that he picked out himself, although his 80-hour workweeks leave him little time to use it.

Whittall said he plans to invest $445 million to build a new five-star resort on the Colony property. Already, he has held discussions with the town and hired a team to design plans that will take two years and several million dollars to create while litigation is ongoing.

Not surprisingly, Whittall’s offers and threats of litigation have generated outcry from unit owners.
Association President Jay Yablon accused Whittall of spreading falsehoods in his offer letter to unit owners.

“The whole purpose was to bully and intimidate the owners, and to continue scaring away any other viable developer candidates, so Unicorp and Colony Lender can take over everything. Apparently, Unicorp does not know the resolve of the owners they are dealing with!” Yablon wrote in an Aug. 10 email.

“He is threatening these older people with hundreds of thousands when nothing has been decided by the courts,” said board member and unit owner Blake Fleetwood.

Whittall, however, insists that past developers have presented scenarios that weren’t doable.

“They’ve been led to believe they’re going to get something for free, so reasonable offers aren’t getting attention. They think they’re going to get a free unit, and, somehow, it’s going to get built, and, magically, some bank is going to come in and loan money,” he said.

Whittall and Yablon have never met face to face, although they have spoken on the phone. Yablon says he conveyed the same message to him that he has to each developer who has expressed interest in redeveloping the Colony: That to gain support from unit owners, the developer must offer fair options for ownership, fractional ownership and a buyout.

Whittall doesn’t believe unit owners will be satisfied with any realistic option.

“I really don’t understand what the unit owners are holding onto now. They haven’t gotten to use their units in five years. They’re paying some costs right now. … They’re on the verge of condemnation.

They’re uninhabitable. I don’t know why they wouldn’t want to get on board with something different.”

Chuck Whittall, president of Unicorp National Development
Age: 48
Hometown: Winter Garden
Family: Wife of 26-and-a-half years, Ronna; daughter, Riley, 12

The un-Colony
Whittall insists there’s nothing that would make him walk away from the Colony.

“The property’s going to be redeveloped,” he said. “If I walk away from it, one of my competitors is going to redevelop it. So, we’re determined that we’re going to redevelop it.”

He believes that five more years is the worst-case scenario for litigation.

“Eventually, suits are going to be won. People are going to tire of litigation that will become expensive,” he said.

Whittall is blunt about what it will mean for the Colony parties if his strategy succeeds.

Dr. Murray “Murf” Klauber, who founded the modern Colony, would get nothing, according to Whittall, who has not met Klauber but met with his daughter, Katie Moulton.

“He would get to come have a cocktail at the new place,” he said.

For Adams, against whom Colony Lender filed a partition action last week in Sarasota County Court in an effort to buy his 5% interest, it’s unclear.

“I’m always open to talk,” Whittall said.

Siegal and Langley will have no interest in the Unicorp-developed resort.

As for the 17-acre property at 1600 Gulf of Mexico Drive, Whittall’s vision will include a new 160- to 175-room hotel, along with a couple hundred condo and tourist units. It’s unlikely that it would be named the Colony, a name he believes has too many negative connotations involved. He imagines the Monkey Room renamed as the Sunset Bar.

“I think the people who are in love with the name ‘the Colony’ are the people who are involved with it. I think the general public will want to visit a new five-star resort on Longboat Key,” he said.

Still, he hopes to find a way to recognize the Colony and its role in history.

“We don’t want to emphasize the past legal woes of the property, but we do understand that the Colony is significant in the heritage of Longboat Key,” he said. “We want to pay homage to the Colony but haven’t decided the best way to do that.”

What does Unicorp own at the Colony?

Nothing — yet. Unicorp National Development Inc. has an agreement to purchase Colony Lender LLC’s resort assets. Unicorp will close on the purchase after undisclosed legal milestones. Colony Lender and Unicorp also argue that they own a recreation facilities lease on the 2.3-acre property, however, the Colony Beach & Tennis Association contends that Colony Lender only owns real property.

How did Colony Lender acquire its property?
Colony Lender previously purchased overdue bank loans on the Klauber-controlled properties, including an 80% interest in a 2.3-acre recreational property, from Bank of America for a rumored $4.5 million, followed by a 15% interest in the 2.3-acre property.

It won a judgment of more than $14.3 million in a foreclosure trial, then, placed the winning bid of $15,200,001 in a July auction to become 95% owner of the recreational property and 100% owner of the other properties.

What is the recreational facilities lease?
Until October 2008, unit owners paid $650,000 annually for use of the tennis courts and other recreational facilities at the property to Klauber and other leaseholders. Whittall and Siegal say that the 99-year lease came with the property Colony Lender foreclosed upon and that unit owners owe $5.1 million for unpaid taxes and rent and could face future liabilities of $42.3 million.



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