Collateral Damage

(Key Club Project Model)

Bank of America recently sold the Grand Mariner to investors at about one third the original construction loan and after the project sat idle for several years. The original investors, in their zeal to optimize their investment, proposed a project that sailed too close to what was allowed by the town's codes and ordinances and a suit ensued. Eventually, the Grand Mariner developer declared bankruptcy. There is no blame here, only financial loss and missed opportunities. Perhaps if the planning and zoning board had applied the town codes more strictly things might have turned out better for the developer.

Land use suites have been lodged against the town by several developers and residents. My experience only goes back to the mid 80s when the Klauber suit cost taxpayers more than $6.5 million dollars. That loss actually shows up in your utility bill today since the utility fund was used to pay the plaintiff.  There was collateral damage stemming from the Klauber suit in the form of about 70 upscale resort/spa suites, with overflow from the spa into surrounding hotels and motels, that were never built. Instead we gained a few more condominiums that are occupied perhaps a month or two a year. Klauber's resort/spa might have become another island hallmark similar to the Colony. We will never know. But we do know that if the project had been completed there would now be around 70 more tourist units to support local businesses.

The collateral damages from the failure of Klauber's resort/spa, and other projects such as the Grand Mariner, the Poseidon and even the proposed house on Longboat Drive North are twofold. First, the vitally needed redevelopment of older properties is impeded. Second, and perhaps a more important consequence of land use suites, is that the the suites may discourage future developers from venturing onto our island. Each time a developer or a resident files a suit against the town for perceived grievances, our stature as a stable, developed community with well founded codes and ordinances may be diminished. Additionally, perspective home buyers may begin to shy away from purchasing property in a community where developers are able to compromise existing property values with the help of a developer-friendly town government.

I am not questioning that the suites I am referencing were necessary or that the outcomes were not just. I am simply saying that if a different course of events had occurred we might now have more tourist units and new luxury condominiums in our community. The suites I am referring to involve actions by the town in land use applications. The town has an unfortunate record in court for those town government actions that displeased developers or residents enough to go to court.

I see the Key Club expansion project as perhaps the best example of how things might have been different. Many people in our community believed that if the Key Club and IPOC could have reached an amicable arrangement, we would not now be witnessing a protracted litigation that will certainly delay the proposed project. Instead our town attorneys and commission decided that it was more to their liking to accept the Key Club proposal in toto, even if it plunged the project into a succession of lawsuits and government interventions. It may come to pass that the Loeb Partners reach a decision to withdraw the project just because of the specter of more and more legal costs and lengthy delays. The current commission and the town attorney appear intent in fashioning some sort of revisionist version of what existed when the Key Club began its tortuous journey through quasi-judicial proceedings. Only the courts will decide if what the commission is currently doing can be substituted for what existed when the commission passed the Key Club expansion plan.

For the commission and the town attorney it seems all to possible for them to legislate their dreams. But they may find that at the end of all the court proceedings, it might have been easier to change the past.

Just as when an 80s commission asked Ms. Stroud about the Klauber suite, and if they had the right to revoke Klauber's building permit, Ms. Stroud has assured the current commission that they have the right and the power to take things into their own hands, this time to rewrite the codes and the comprehensive plan to suite the developer. We will have to wait to see if the courts agree with Ms. Stroud this time.

As for the Key Club proposal, I do not recall any other time in my life when I have witnessed a public entity being paid by a developer for its services on behalf of the developer. I am personally very uncomfortable with the financial arrangements in what to me looks just like a pay-to-play government deal. Let's hope there is not too much collateral damage this time.