One in a series MEXICO BEACH — Long, scaly clouds draped over the Gulf of Mexico as Tom Wood shuffled toward the beach with two bottles of red wine and a sleeve of plastic cups.The sky hinted at peach and pale yellow, the first strokes of another watercolor evening in a decimated town, where so many cottages and sea dunes have fallen that bare lots a block inland now share gulf views.“We have the most amazing sunsets since the hurricane,” Tom’s daughter Shawna said. Then, hesitating: “Maybe they were pretty before, I just didn’t notice.”Tom’s family followed, strolling along the edges of their crumbling Driftwood Inn or climbing through its rotting front rooms. They stepped over old papers and pictures and broken wood, a life’s collection mulched by Hurricane Michael.The heart of the Driftwood, the main building, remained upright five months after the storm, a shadow slouching into itself above the sand.Mexico Beach was beginning to feel like a place caught in between, where it was easy to imagine the potential in open spaces but impossible to forget what was missing.The Woods gathered on the cracked stone patio — Tom, Peggy and their kids, Bart, Shawna and Brandy, spouses, Shawna’s daughter and grandson — four generations, joined by a couple of friends, saying goodbye to 43 years. They had grown up at the Inn, gotten married there, celebrated graduations, Christmases and Thanksgivings.A wrecking crew was scheduled to take down the building soon, when only Peggy and Shawna were in town to watch. The Woods were unsure if they would create a new Driftwood, or if this sunset was goodbye.Purple martins flitted above them, looping silhouettes that Tom had worked for years to attract to their section of town. He had put up birdhouses so he could watch them glide.The sky smoothed to pink and lilac as the sun slid lower.“Let me offer a toast,” Tom said. Everyone straightened their arms as he stood, lifting their cups.“To the Driftwood, and all the people that made it what it was,” Tom began.“And hopefully what it’ll be in the future.” Part One: Dream, Interrupted Part Two: If they build it... The Driftwood and other coverage of Mexico Beach Hope waltzes with doubt as the get-back-up attitude of the hurricane’s immediate aftermath has faded into a long, expensive slog through destruction.Before the storm, the town served about 2,250 utility accounts, the city administrator said. Now Mexico Beach services about a third of that.As residents begin another month living in campers, swatting at mosquitoes as big as thumbnails that grow in the lingering muck, apprehension has seeped in. The air carries a whiff of mildew, like towels left too long in the washer. Rats have invaded the walls at Shawna’s house.Fuchsia bougainvilleas bloom, blushing some lawns, but “most everything green didn’t make it,” Peggy said.She still has to travel out of town to buy bread. The local grocery looms as a hollow shell she can see straight through from the street.It’s hard to tell what the hurricane took and what the heavy yellow machines parked every few blocks finished off.“Every time you drive down the road, you see something else come down,” Peggy said.Residents stand along the walls of a cramped central room in city hall to hear the latest updates on recovery. Officials now expect to spend $60 million just for debris removal, money that should be reimbursed by the federal government.On the vast beach, where sometimes a stray couple walks or a fisherman casts a line, excavators carve a slow path along the water, scooping sand to sift out rubble.Restoring the marina and boat ramps and 28 dune walkovers are priorities in a place that depends on tourism. Crews may need as many as 2,700 truckloads of sand to build up emergency berms at the edge of the beach.Later, officials will look to building a new pier and government complex.They have not replaced many city signs, welcoming people to Mexico Beach or marking the public buildings. They worry dump trucks and bulldozers will knock them down.At the northwest end of town, the welcome center sits in a portable building with a teal box of brochures.“Mexico Beach,” the container reads. “A Place to Remember.”A couple dozen friends — former guests, co-workers, neighbors — gathered on the sand next to the Driftwood on a foggy Monday afternoon, mixing champagne with orange juice and eating pizza while they waited for the wrecking crew.Peggy described demo day like a funeral: grim but necessary, something she had to observe as a sign of respect. That morning, she coached herself and her guests to stay upbeat: “It’s not about coming down. It’s about coming back.”A couple from Indiana, Julie and Jim Lichlyter, drove south to be with the Woods, staying in the camper Peggy bought for herself after the storm. Annual guests, the Lichlyters chose not to vacation elsewhere this winter, saying it would have felt “like cheating on your spouse.”A local couple came with their children — new friends who met Shawna when they spotted her crying in her driveway after the hurricane.The Woods wore matching navy blue T-shirts, showing the outline of Florida with a heart looped through Mexico Beach.• • •Demolition, Peggy hoped, was a first step toward recovery, but her family struggled to envision what came next.By early March, they had received about $3 million from flood and wind insurance, a big sum, but hardly a match for what they had put into the property. That total also covered several of the family’s rental houses across the street that were destroyed.Estimates for construction just for the motel ranged from $3 million to $6 million. That didn’t include finishing touches like tile and refrigerators and beds for as many as 23 rooms.Tom had plowed through dozens of sketches, plans dreamed and discarded, and was still adding parts he’d forgotten, like public bathrooms and a laundry.The Woods owned other properties, including lots around the business center in Mexico Beach, where they considered putting small shops and restaurants, as well as a building in Atlanta. Those had value, and they still hoped for another $1 million in insurance payouts.The finances were a puzzle, the goal being to bring a practical new Driftwood into focus.Peggy had lived at the Inn, enjoying an apartment on the second floor with panoramic views of the beach, while Tom stayed in Atlanta but visited regularly. It was home. The Woods considered themselves fortunate, knowing others in town lost houses with no chance of affording a rebuild. They saw their neighbors leaving Mexico Beach.Tom, 78 like his wife, spent most of his last weekend around the old Inn toting an oxygen machine, tubes stuck through his nose, the rhythmic pulsing of air a backdrop to his conversations. He has chronic obstructive pulmonary disease, worsened by the mold and dust in town, some of which likely contained asbestos.Peggy figured Tom’s breathing trouble was further exacerbated by stress. He’d already accepted the rebuild could take a year and a half, maybe two — far longer than he’d hoped. They needed to spend a lot of money to even determine whether the project was feasible, nearly $50,000 for demolition and hauling, another $5,000 just to get started with an architect.The kids didn’t want their parents to shoulder debt they would later inherit, so the family balked at taking out a Small Business Administration loan available after the disaster.Tom worried, too, about whether his children would want the Inn after he and Peggy were gone. He had brothers whose relationship deteriorated when they tried to go into business together and stopped talking. He did not want the same thing to happen to his kids.The Woods were supposed to have a meeting after they toasted the Driftwood, to find out where everyone stood. Tom expected a difficult conversation, to determine not whether the family could rebuild the Driftwood, but if it wanted to. But the meeting was called off when some of them got sick.Tom, Bart and Brandy headed back to Atlanta. Peggy and Shawna waited for the demolition.• • •Shawna hopped in an excavator, rumbling beside the Driftwood, as Peggy tried to call her husband so he could be part of the moment. The demolition workers agreed to let one of them pull the levers and take the first chunk out of the Inn’s skeleton.Shawna brought the bucket down on a corner of the roof, metal and wood clattering as the machine tore a jagged hole.Watching from the side, Peggy put her hand across her mouth, stifling a snort that sounded like a laugh and a cry colliding. She had lived in the shadow of the damaged Driftwood for five months. Now it was finally falling apart. Peggy steadied herself and clasped her hands behind her back.“Okay,” she said.• • •People approached throughout the afternoon, a sporadic receiving line, hugging Peggy and Shawna as the demolition continued.Drivers slowed and pulled out their phones to take pictures from U.S. 98., capturing the first phase of a multi-day teardown.Michael Scoggins, co-owner of the ruined Killer Seafood, a favorite local eatery, bent to squeeze Shawna. “Tough day,” he said.She told him his restaurant would have to come back. “Somehow, some way,” he said.The crowd hung where the Driftwood’s cottages and chapel used to be, next to a palm tree where the storm had left a piece of sheet metal embedded in the wood, like a blade fired from a cannon. Nearby, Tom’s rolling red toolbox lay mangled, a wadded tissue made of steel.The excavator moaned, knocking out windows, broken glass falling like heavy rain, joists snapping like pencils. The machine plucked sections of the red tin roof — new, Shawna ruefully remembered — and piled them in tangled ribbons for scrap.Cathey Parker Hobbs, a longtime friend of the family, whose father led the development of the town decades earlier, watched in a “Make Mexico Beach Great Again” shirt. She had recently seen her family’s real estate office come down a few blocks away, even as business was chugging along.“Sold” signs were replacing “For Sale” markers around Mexico Beach. About 15 properties sold in the first 20 days of February, according to county records, including five for more than $250,000. The cottage next to Shawna’s house was under contract, the flier out front marketing the property “as is.”Elsewhere, some residents had posted signs of defiance: “Not for Sale.”Hobbs said she rarely had to push a hard sales pitch, and many places, even with damage, sold at close to full value. The new owners’ exact plans were unclear.Investment was a welcome sign that people were still interested in Mexico Beach, but Shawna, 54, worried the community was losing residents with whom she grew up and hoped to grow old.Full-timers had long resisted development, and after the storm, they struck a balance, maintaining height requirements to keep residential buildings below 32 feet and commercial buildings below 48 feet, but accepting the ground level would rise.Many people rebuilding would need to go up 1.5 feet above base flood elevation.Residents remained anti-chain and proudly recalled living with no stoplights before the storm.“We’ve got to have progress,” said Bobby Pollock, a local political candidate who stopped to watch the Inn go down. “But we want control.”Pollock is running for one of two open city council positions in Mexico Beach, the election just weeks away. His yard signs read: “Let’s Rebuild ‘OUR’ City TOGETHER.”• • •Day two of the demolition began under a sharp sun, Peggy in the front seat of her truck, dabbing at her eyes with a tissue as the excavator clawed into her old living room.Shawna watched from a chair with a couple of Driftwood employees after sifting through the rubble, collecting pieces of wood for memorial picture frames.Rooms 10 and 1 had been the first to go, onto 11 and 12, the machine chewing through walls, revealing the bright colors of each space, a diorama in steady collapse. Shawna thought of the guests who used to stay there.“With every swipe,” she said, “a memory.”She posted about the demolition on Facebook and read messages of support from longtime customers, encouraging but also intimidating. If the Driftwood rose again, she thought, it might be on stilts, with elevators to take people to the beach — not exactly a vision of old Florida.“Are we going to be able to put it back so they love us just as much?” Shawna wondered.Trucks began parking on the side of the road a block away in the early afternoon. The city council was holding another meeting, residents brushing shoulders in a hot room and fanning themselves with scraps of paper.First order of business was the “Mexico Beach Town Village,” a proposal by the St. Joe Company, a former timber outfit turned powerful developer with a vast portfolio of land.Company leaders wanted to build a complex of retail space, apartments and homes, as many as 600 units, on wooded property they owned in Mexico Beach. Mayor Al Cathey said St. Joe first reached out to him last January, months before the storm, talking about housing aimed at families moving for a program at nearby Tyndall Air Force Base.Shawna was wary.“They have an endless fund,” she said of the developer, “where we don’t.”Peggy, though, had contacted the company through a friend, seeking assurances she could purchase land St. Joe owned at a development just outside Mexico Beach called WindMark Beach, in case something went wrong and she wanted to move the Driftwood.Bridget Precise, a company vice president, showed renderings of garden-style apartments and said every builder St. Joe had talked to was interested, even as residents lamented the struggle to secure contractors amid high demand after the storm.The developer had owned the land for decades, a spokesman said, and accelerated plans to build on it after the hurricane as a way "to help our neighbors." St. Joe promised to adhere to Mexico Beach’s building regulations and preserve its quaintness.Outside city hall, the excavator’s groan carried down the street from the Driftwood.Someone asked if the new village would include a hotel.“To be determined,” Precise said.Another person asked when construction would start.“As soon as possible.”• • • Times staff writer Douglas R. Clifford contributed to this report.