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Bitter internal battle shuts famed Longboat Key resort

LONGBOAT KEY — The Colony Beach & Tennis Resort will close indefinitely Sunday, the second time in the past year legal loggerheads have prompted the famed destination on the island straddling Manatee and Sarasota counties to shut down.

Staffers will attempt to relocate guests who have reservations, said Katherine Klauber Moulton, the Longboat Key resort's president.

But unlike last September, when a simmering, 4-year-old dispute with condominium owners shuttered the Colony for two months, the new closing could be permanent.

Klauber Moulton said in a statement that she and her family — who have run the 18-acre beachfront resort and its centerpiece condo hotel for four decades — are "closing a chapter in our lives." The shutdown also will be more inclusive than the last involving the hotel units, restaurants and recreational operations.

"This is taking one of the strongest international magnets we have and letting it literally crumble," said Virginia Haley, president of the Sarasota Convention and Visitors Bureau.

The resort's closing follows a federal bankruptcy judge's ruling Monday that a Klauber family-led operating partnership, Colony Beach & Tennis Club Ltd., should be liquidated.

Though Bankruptcy Judge K. Rodney May's ruling means general partner Dr. Murray "Murf" Klauber and his family will no longer operate the Colony's hotel, they will continue to own the resort's restaurants, swimming pools and tennis courts.

For the resort's 232 condo unit owners, the ruling represents a formal separation from the Klaubers and the ability — at least in part — to control their fate, a lawyer for the Colony's homeowners association said.

"It is the intent of the unit owners to work to reopen the condo resort hotel at the Colony, but a lot has to occur before that can happen," said Tampa lawyer Jeffrey Warren. "The worst case is the Colony never is able to open as the resort hotel it was."

For both sides, however, the court-ordered liquidation will likely intensify the impasse and animosity over responsibility for more than $12 million in repairs at the resort, which sparked the legal battle.

Judge May ruled last November that the unit owners were not responsible for the repairs.

Warren said Tuesday that there are a "lot of problems left behind by Dr. Klauber and Ms. Moulton" at the Colony.

Klauber Moulton, in turn, used the Colony's closing announcement to take shots at the homeowners.

"The failure by the unit holders to make improvements to the property has caused the resort to fall into a physical condition that was no longer that of a luxury destination resort, which has been a Colony standard for four decades," Klauber Moulton wrote.

Warren said the association will attempt to reopen the Colony's hotel, perhaps with services or amenities in concert with other, nearby resorts. He did not elaborate or offer a timetable.

But he cautioned that many issues — including the millions of dollars in deferred maintenance and the outstanding balance on an $8 million mortgage held by a local group — remain unresolved.

Bitter internal battle shuts famed Longboat Key resort 08/12/10 [Last modified: Thursday, August 12, 2010 7:41pm]
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