ST. PETE BEACH — The owner of the Coral Reef Hotel has not had a good year, and its about to get worse.
A bad economy, plus an overdue property tax bill and a mortgage foreclosure is bad enough, but now the city wants him to either repair or tear down the deteriorating hotel.
Also, the city's long and continuing legal battles over its comprehensive plan and development regulations has blocked several attempts to get financing from or to sell the property to major hotel groups.
Bobby Fleeting, the managing partner of the ownership group, Coral Reef Partners LLC, said this week that he expects the latest deal to fall through because of a recent court ruling invalidating the city's comprehensive plan.
In 2006, Fleeting had a $6 million deposit in hand to redevelop the property as an international resort. Largely because of a failing economy, it never happened.
In 2007, a contract to redevelop the property as a Marriott Resort collapsed.
Last year a European group was interested in redeveloping the hotel property as a $60 million, 12-story major hotel or time-share resort. That deal also fell through.
This year, Fleeting said another redevelopment deal with yet another European group was ready to close by the end of December.
"This is the fourth time we have arranged funding for it to fall through. It won't happen now," Fleeting said. "The judge's ruling has put it all back in limbo again."
According to Fleeting, because of Federal Emergency Management Agency regulations it is impossible to bring the building up to the city's code requirements, and it would cost about $450,000 to tear the hotel down.
"It is very disappointing that the city is putting pressure on us when we can't do anything. No fool would invest in the property at this point," said Fleeting, adding that he was surprised that the city is preparing an extensive code violation citation, considering his financial situation.
The Coral Reef Hotel, at 5800 Gulf Blvd., was built in 1963.
Fleeting and his partners bought the Coral Reef in 2004 for $7.3 million, mortgaging $5.5 million of that amount with Wachovia Bank.
One week after the partnership bought the hotel, the city condemned the structure. It has been boarded up ever since.
The partnership refinanced in 2007 with BB&T Co. of North Carolina.
According to court records, that bank foreclosed on the $11.3 million mortgage in July. The case is still wending its way through the courts.
Fleeting's company also owes more than $90,000 in back property taxes for 2009, as well as more than $54,000 for 2010 property taxes. According to the county property appraiser's website, the tax bills have yet to be paid.
Meanwhile, the hotel's mold-stained walls, chipped floors and exposed wiring remain. The boards over the windows are deteriorating, the building interior is weather damaged and the former Bongo's beachfront bar is nearly falling down.
"We have tried to be patient in hopes of redevelopment, but it doesn't appear likely that will happen any time soon. The welfare of the community requires that some action be taken," says Karl Holley, the city's director of community development.
He said the hotel building is "extremely substandard," "visually distracting" and "potentially dangerous."
"We are going to require all aspects of the property to be brought into compliance or give them the option to demolish," Bruce Cooper, the city's building code administrator, said in a recent e-mail.
Cooper said a similar move by the city against the former ABC liquor store convinced its owners "it was better to tear down than to pour money into fixing up the place."
Complicating the matter is the nearby but separately owned Coral Reef Beach Resort, whose electrical service runs through the hotel property.
Holley said it could take a "substantial amount of money" to reroute the electrical service, and he is unsure whether Fleeting or the adjacent time-share bears the financial responsibility for the work.