Who owns the land? Judge will decide
Two groups of investors lay claim to 2 buildable acres of gulffront property. The dispute is hurting residents who live in condos there.
By MOLLY MOORHEAD
Published June 19, 2006
The land beyond the tennis courts and parking lot, past the pool and high-rises, is raw - much like its potential.
There sit 2 prime acres of buildable, gulffront property, maybe the last of its kind in Pasco County.
"What a great place to build condos," county Property Appraiser Mike Wells said.
For now, though, no one can do a thing with it.
The property, part of the Gulf Island Resort condominiums in Hudson, is hung up in court. Two groups of investors are fighting over ownership of the land and ultimately the profits from developing it.
The lawsuit, first filed in 2003, also involves 18 condo units and alleges slander and civil conspiracy and seeks damages. But the only question before Circuit Judge Wayne Cobb right now is this: Who is the rightful owner?
Gulf Island Resort, at the end of Sea Ranch Road west of U.S. 19, comprises three nine-story buildings with a private lagoon and other amenities.
Despite its front seat on the water, the complex has seldom been paradise. Instead, it has frequently been the subject of homeowner unhappiness and protracted court fights. Peppered among luxurious, remodeled units are uninhabitable ones blackened with mold.
Developed in 1983, the property has changed hands numerous times, been devalued and foreclosed on, and fallen into disrepair and out of profitability.
In 1993, the investment group Gulf Island Resort Limited Partnership bought the property from the federal government, which took it over from a failed savings and loan. The investment group paid about $7.2-million and spent $5-million more renovating the waterfront complex. It advertised units for $49,900 and up - units now assessed at about $200,000 and up.
That relationship eventually soured, too, and the venture ran out of money.
Now the investment group is suing another set of investors, who bought the 18 units and 2 acres from one of the group's partners, allegedly without the knowledge of the other partners.
The defendants, Dana Berman and Keith Novak of Miami, said their 2003 purchase is legitimate.
"We bought it from a guy who had authority to sell it to us,'' said their attorney, Hutch Brock.
But Alex Bistricer of Gulf Island Resort Limited Partnership said that when he and his partners bought the complex in 1993, they spelled out that all business decisions - namely property sales - had to be agreed upon by all of them.
"The agreement's real intent was to protect the main asset," Bistricer testified recently.
But that new partner, Eisi Markovitz, in 2000 started making deals on the side, according to the lawsuit. The next year he transferred property to a company he controlled, then, facing foreclosure, went looking for a buyer.
Pasco County records show that in February 2003, Oceanside Acquisitions and DBKN Gulf Inc. -- companies controlled by Berman and Novak -- paid $825,000 for the 18 dilapidated condos and $825,000 for the vacant land.
The seller was Gulf of Mexico Enterprises, whose sole officer is Markovitz.
For their part, Berman and Novak say they paid Markovitz for the property fair and square, and they cite numerous examples in public records of that unanimity requirement being ignored through the years.
Case in point: Bistricer's own attorney, in arguing one of myriad earlier disputes, called the claim that unanimity was required "inherently absurd."
Additionally, Berman and Novak say the other partners were engaged in the exact kind of self-dealing Markovitz is accused of, almost from the start.
The case doesn't affect just the big-money investors.
Residents say the units are shabby and unkempt, and that's hurting their quality of life.
Unit 401 - one of the 18 involved in the lawsuit - is littered with bedsprings, buckets and broken chairs. Mold, with its overpowering stench, grows unchecked up walls and inside closets.
"It's pretty wretched," said resident Linda Bowman.
The sales building at the entrance of the complex is quite a calling card. A big section of the roof has fallen in, exposing wood beams and rusty nails. An orange "condemned" sign is taped to the front of the white stucco building.
Still, someone keeps the hedges trimmed.
Additionally, several of the condos in dispute are under contract to individual buyers. It's unclear what will become of them when the case concludes.
No one can pinpoint the true value - and potential value - of the property in dispute. Gulf Island Resort condos are assessed at $220,000 and up, according to county records, with assessments generally being about 80 percent of market value.
But the golden egg might be the vacant land. DBKN owns just more than 8 acres jutting into the gulf, but only 2 are dry enough to build on.
The land is zoned multifamily, with the number of units allowed capped at 99, according to the property appraiser. Any development would have to be approved by the County Commission.
Wells, the property appraiser, said the owners are sitting on a scarce commodity.
"I can't think of any sizable, undeveloped gulf-front property. Most of the gulffront is taken up with parks," Wells said. "It's an unusual piece for the coast.
"That land has the potential of being extraordinarily valuable."
Nathan Hightower, an attorney for Bistricer, said the new owners clearly recognized that. He said they listed the land for $5-million soon after they closed on it for $825,000.
"We do expect there will be evidence that's going to support the claim that there was fair market value paid on the property," said Brock, Berman and Novak's attorney. "It was an arm's length transaction.''
Not so, says Hightower.
"They (the defendants) knew the other two (partners) wouldn't agree to the transaction because they were acquiring the land for far less than the market value," he said. "Mr. Markovitz was trying to get whatever he could."
[Last modified June 19, 2006, 08:50:25]
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