TAMPA — A federal judge has approved a debt restructuring plan that could bring the Safety Harbor Resort & Spa out of bankruptcy and clear the way for the city of Safety Harbor to buy a chunk of the resort's bayfront property for a park.
On Wednesday, U.S. bankruptcy Judge Michael G. Williamson reduced the resort's secured debt from $30 million to about $17.8 million, which will be repaid over a five-year period.
The action, said resort attorney Steve Berman, will enable his client to "re-emerge from bankruptcy with a realistic debt structure. They are going to be in a better financial situation, which is going to enable and ensure the continued viability of the resort."
Williamson also approved the resort's plan to sell about 15 acres of its downtown Safety Harbor property to the city. The property along the shore of Old Tampa Bay runs north from Veterans Memorial Lane at the city marina to Mullet Creek.
The city is offering almost $4 million for the property, which would help pay down the resort's overall debt. The sale to the city is contingent upon an appraisal of the property, a land-use agreement and an okay from the City Commission.
The appraisal of the property will have to come in close to the city's almost $4 million offer, or the court will have to reconsider the issue.
The City Commission will probably take up the purchase at a July meeting.
"The residents of Safety Harbor are ecstatic over the prospect of being able to purchase this strategically located piece of property," said Mayor Andy Steingold. "I'm quite pleased that the proposed purchase is moving as anticipated."
Steingold noted that although the property is expensive and these are tough times for local governments, the opportunity to get the land might not come again.
At the May 16 City Commission meeting, commissioners envisioned the property as a park with a beach, volleyball courts and walking trails.
A second group of investors has made an offer of $2.8 million for the land, potentially to build housing. However Williamson, the bankruptcy judge, opted to proceed with the city's proposal as his first choice.
"The critical part is to keep the ball rolling," Williamson said. "It's a positive that the city has shown such an interest."
William E. Touloumis is the president of Olympia Development Group, which owns the 22-acre resort. He said he is pleased with the city's plan.
"We still retain the open view, and somebody else takes care of the mowing," Touloumis said. "It works for us very well."
S.H.S. Resort LLC, a company formed by Olympia Development Group, purchased the resort in 2004 for more than $20 million. The group then spent another $20 million in renovations and remodeling. Then the economy tanked.
Last fall, the resort filed for Chapter 11 bankruptcy protection.
The spa is one of Florida's oldest and has been a part of Safety Harbor's downtown for 60 years. It is listed on the state's register of historic places and is known for the mineral springs that run beneath the property.
"Safety Harbor's largest employer is still in business," said Howard P. Slomka, the attorney for Olympia Development Group, after the judge's decision. "We are still open for massages and weddings. By selling to the city, we can still host concerts and firework shows. None of that is going to change, and that's great for the residents."
Contact Demorris A. Lee at email@example.com and (727) 445-4174.