Strategy for Whittall

Don’t fall in love with the dirt. 

That’s always the advice of the most astute real estate dealmakers. 

But we’re all human. And sometimes we can’t resist. Our emotions get the better of us.

And then, alas, if you find yourself in love with the dirt, or in love with the deal, you can end up tangled in costly, stomach-twisting, spaghetti-like business quandaries.

Chuck Whittall, owner of Unicorp Development, the would-be redeveloper of the Colony Beach & Tennis Resort, surely knows this feeling.

He really likes Longboat Key. Last June, he paid $4.2 million for a unit at the new Aria condominium. That was after he purchased 15 units at the Colony for $875,000 this past fall. In his pursuit of redeveloping the Colony property, he agreed to purchase for between $23 million and $24 million 2.3 acres of Colony property and all of Murf Klauber’s former assets from the entity known as Colony Lender. All that is on top of the legal fees that add up quickly when drawing up purchase and development agreements.

Whittall is in deep. And apparently, the Colony project, the Colony’s extraordinary beachfront real estate, is so alluring that developer Whittall cannot resist the challenge to do what others haven’t been able to do: make everyone happy and develop the new jewel of the West Coast of Florida, the new jewel of Longboat Key.

But he has met reality: six constituencies he must please. 

It’s an extraordinary business challenge.

The six he must please:

• The owners of the 237 units of the former Colony. Altogether, as an association, they own title to their vacation units and 15 of the 18 acres of Colony property. To be able to redevelop the property, Whittall must be able to offer them an attractive price — and maybe free vacation time — to persuade them to sell their units and the underlying property. 

But his price has limits. If he wants to make a profit himself, he cannot offer them too much. If he’s too low, the unit owners will reject him. 

That explains his proposal for what seems like the maximum amount — 180 new residential units and 417 residential and hotel units altogether, almost twice the number of units as existed at the old Colony.

He needs that number of units to generate the cash to pay what he has offered Colony unit owners — $130,000 to $200,000 per unit.

• Andy Adams, the Tennessee entrepreneur who made his fortune developing and operating senior living centers and a longtime, avid tennis player at the Colony. 

Adams ultimately will decide whether Whittall is the developer. Adams controls enough units (69)  that his approval is required for anyone to go forward. 

Whittall must either buy Adams’ units, or make a deal that pays Adams for some of his units and keeps Adams on as a partner. If you’ve followed Adams’ business career, you can expect he wants a return on his 10-year investment in Colony units. We’ve been told his number is between $20 million and $30 million.

Adams’ price is another reason Whittall wants the 417 units.

• Longboat Key voters. As most Longboaters probably know, Whittall needs voter approval to increase Longboat Key’s residential density. His proposed addition of 180 units are crucial to Whittall’s financial success. 

Without voter approval, logic says Whittall likely will be forced to lower his buyout offers to Adams and unit owners. What happens then? 

If they reject his offer, the Colony association and unit owners could opt to seek a new developer, leaving Whittall the owner of 2.3 acres of Colony property, the owner of 15 Colony units and a mortgage to pay off Colony Lender. That’s it.

• The Longboat Key Town Commission. Let’s put it this way: Longboat town commissioners are not in an accommodating mood with Whittall and the Colony Association board.

Go back five-and-a-half years. That’s when the Town Commission approved the first of six extensions to the Colony Association, delaying the town from declaring the Colony an abandoned property and taking away its entitlement to 237 grandfathered tourism units. 

Assuming Whittall wins voter approval for 180 new residential units and unit owners’ approval to be their developer, which is still pending, he and the association would then need the Town Commission’s approval to develop his five-star, five-building, high-rise complex.

• Bankers, investors, financiers. If Whittall were to clear all of these hurdles, one of the final constituents to please would be the people who would lend and invest the money necessary to develop. They would want their share of the pie.

•  And the final constituent to please: Whittall himself. Every concession made along the way presumably reduces Whittall’s return on investment. At some point, it won’t make economic sense.

What would you do?

WIN HEARTS, MINDS, TRUST

Far be it from us to be the experts, but we’ve seen enough on Longboat Key to know what works and what doesn’t. Which is why last week in this space we took the unusual position for this newspaper to recommend a “no” vote March 14 on the Colony referendum.

Customarily, we are staunch advocates of property rights — of owners having the right to determine their property’s highest and best use, as they see fit, so long as they do not inflict economic or physical harm on their neighbors.

In spite of that philosophy, we made the unusual conclusion that Whittall and Unicorp’s proposal for additional density should be rejected. And we did so on the basis that Unicorp’s proposed complex doesn’t fit and is out of scale. We said Whittall should have asked for less.

While we understand Whittall’s economic and business dilemmas — as outlined above — we also have observed Longboat Key long enough to know that winning voter and Town Commission support is a process. A process of winning hearts, minds and trust. And especially not appearing to be greedy.

COMPROMISE WILL BE REQUIRED

Indeed, if Whittall wants to win the support of Longboat voters and the Town Commission, here’s what we would advise:

Tell Longboat Key residents you have heard them — loud and clear at your public meetings. You heard them tell you the renderings show a development that they believe is out of scale for the Key. Apologize for not listening and seeking their suggestions, ideas and wishes first — before creating any drawings or plans.

Tell everyone you don’t expect voters to approve the density request, and in spite of that, tell them you’re going to regroup, start over and come back with a better plan. 

But before you do that, you’re going to make the rounds. Go to the residents and voters. Go to every condo association; every church and temple’s men’s and women’s clubs; Kiwanis; Rotary; the Garden Club; historical society; Longbeach Village; the Longboat Key Chamber of Commerce. Ask questions. Listen. Learn. 

Attend commission meetings. Get to know the commissioners.

Don’t brag. Don’t boast. Don’t make big promises. Be honest. Earn trust.

Then take what you’ve heard and come back with a new plan. Test it. Build support for it in all the places you visited before. And then formally propose it.

Likewise, if this is what is to be required of Whittall, Longboaters must also be realistic. Rejecting everything or wishing for what the Colony used to be is not an option. 

What’s more, Longboaters also must understand that in today’s development world, another reality is this: To develop a four- or five-star resort into an economically viable venture typically requires a residential component. You see it often — the Vue and Westin hotel in downtown Sarasota; the Ritz-Carlton, Sarasota and Ritz condos. 

If Longboat is to remain Longboat, today’s marketplace demands and financial realities will require compromises. The days of the Colony bungalows are gone; 237 small tourist units are not economically feasible. Inevitably, the Colony property must be bigger. At the same time, no one involved should expect to get everything he wants. The final product must make sense for every constituency.

What’s the definition of a good deal? When everyone feels it’s a fair deal.