Colony case: Close to closure?

On July 20, U.S. Bankruptcy Judge K. Rodney May issued two orders in the Colony case, both of which tilted in favor of the Colony Beach and Tennis Association.

May sanctioned Colony Lender LLC and Unicorp, the two entities that control of 2.3 acres of recreational land at the resort and ordered them to pay $69,628.50 for allegedly violating an automatic bankruptcy stay by suing unit owners over payments for that land. 

Further, May determined that Colony Lender had not acquired the recreational lease associated with the actual real property. Colony Lender had previously sought damages and back rent from unit owners in connection with the rec lease.

“Well it wasn’t surprising to me,” Colony Association President Jay Yablon said of the orders. “We were expecting them, because we felt we were right here.”

In a July 21 memo updating the Longboat Key Town Commission on the status of the litigation surrounding the property, Assistant Town Attorney Kelly Fernandez wrote:

“Other than remaining appeal rights, the vast majority of the litigation involving the Colony property has now been resolved.”

But those awaiting resolution in the 8-year-old legal saga shouldn't celebrate just yet.

Representatives of Colony Lender say they plan to appeal the decision.

“As far as the two rulings go, we believe they are clearly erroneous,” said Colony Lender principal David Siegal. “And we will be appealing both of them to the district judge, as we have in the past.”

Still, the Colony Association’s board of directors voted 8-1 Tuesday, to send a development agreement with Unicorp to unit owners for a vote. The two sides would need approval from 75% to 90% of owners to proceed, an amount that varies due to legal uncertainty over the possibility of the agreement being challenged, Yablon said.

If approved, the development agreement would include a global settlement of most litigation surrounding the property.

“If unit owners approve the development agreement, the rulings are irrelevant,” Siegal said.

If not, the case would continue through the appeals process.

Unicorp President Chuck Whittall is clearly hopeful about Tuesday's vote: He’s planning a press conference at 10:30 a.m. Thursday at the Colony to announce his team of architects and engineers.

Further, if he is able to get Florida Power & Light and other entities to disconnect the gas and electric utilities at the shuttered resort, Whittall plans to start demolition of some of the collapsed recreational property and tiki huts.

“I’m hoping for effect that we’ll actually have loaders knocking the buildings down,” said Whittall, who plans to break ground on the project within 18 to 24 months.

Unicorp is planning a 180-unit hotel, with an additional 180 condominiums but will seek approval for up to 417 units. That would provide 237 tourism units if owners of every unit opted to keep a unit with a 30-day stay option.

That means Whittall will need Longboat residents to vote in favor of a referendum to increase density on the roughly 18-acre Colony.

In June, town commissioners extended 129 of the grandfathered tourism units at the resort to Jan. 9, 2017. When they granted the extension, commissioners said they want to see significant progress in redevelopment of the site.

Unicorp is slated to close on its purchase of Colony Lender’s recreational land this week. Siegal and former Cedars Tennis & Fitness Club Inc. owner Randy Langley formed Colony Lender in 2010, when they purchased a mortgage on the tennis courts, the Colony restaurant, the swimming pool and Klauber’s penthouse and office from Bank of America. 

“I think Colony Lender will be ‘bye bye’ (this) week,” Siegal said, which means one less player in the Colony saga.

MW Corp., a company headed by Longboat resident Manfred Welfonder, is continuing its own push to redevelop the Colony.

“Our group was and is prepared to move forward with our conforming, doable and feasible project (i.e. without a referendum) and have the necessary funds available,” Welfonder has written in several emails to Colony Association board members.

Whittall, who entered the Colony storyline two years ago, said he plans to be a good community partner in the redevelopment effort.

“I don't give up on stuff like this,” Whittall said. “It makes sense to be there, and it’s going to be a great project for the Key.”