Rotunda - Cavanaugh Communities
|in late 1974 or early 1975, one of our lenders Chemical Bank
of New York approached us on a problem that they had with another
Florida Community developer - Cavanaugh Communities.
Chemical and a high flying Real Estate Investment Trust (R.E.I.T) of the day Continental Mortgage Investors (C.M.I.) were primary lenders to Cavanaugh on its project on the west coast of Florida called Rotonda.
Rotonda was conceived a few years earlier by a man named Joe Klein, a protégé' of Leonard Rosen of Gulf American.
Joe Klein and Joel Jankowitz, his chief executive and - also - promoter extraordinaire, had acquired a 25,000 acre parcel on the west coast of Florida between Sarasota and Fort Myers with property on the Gulf of Mexico and waterways leading to Boca Grande Pass.
The land was partially above sea level but the majority was swamp. Included was a particularly nice stretch of beachfront on Don Pedro Island. Unfortunately at the time Don Pedro could only be accessed by boat.
On the higher lands they planned an interesting and very salable project around an enormous circle three miles in diameter. The circle was divided into eight equal - pie shaped - sections. The sections would be the site of seven golf courses named the Monday Club, the Tuesday Club ... and so on. Residents could play a different course each day of the week! A tributary which connected with the intra-coastal waterway wound its way up in to the eighth wedge. It would would be the site of the marina for Rotonda.
Substantial addition acreage - about 20,000 acres of the 25,000 lay outside of the circle - mostly in the wetlands.
It was said that the plan for the circle was invented over cocktails one night when a wet glass was set down on a property map!
The majority of the planned community sat outside of the circle on the wetlands.
For Rotonda wetlands Cavanaugh had a unique plan. The contract would be for the legally described parcel. In the contract Cavanaugh was not obligated to develop the property. Instead they would make a best efforts basis to develop it and the customer would be billed for the cost - whatever it might be - if and when the work was done.
Cavanaugh used it as a sales pitch explaining that "only the cost - with no mark-up - would be passed on. Of course the customer was, in effect giving them a blank check when he signed the contract. And if the property was never developed there would be no refund - the customer would get a deed to his parcel of swamp.
The primary sales office for this project was Las Vegas.
By 1975 over 25,000 lots had been sold.
Cavanaugh Communities declared bankruptcy in February of 1975. In May of 1976 the bankruptcy court approved the lenders proposal for Deltona to take over management of Rotunda. We were now managers of the Cape Cave Corporation - the Cavanaugh subsidiary that owned Rotonda - and Rotonda West Utilities Corporation which supplied water and other utilities to the project.
We went to work sorting out the mess - at the same time we were trying to dig our own way out of the impact of the Marco Permit denials.
We spent several months just figuring out where the project stood. How much cash was available for development? What was sold and unsold. What kind of contracts did they use? What had they told customers? What could be developed? When could they be developed? Could the six other golf courses be delivered (one was already operating)? What were the environmental problems? How did the unusual reverse osmosis water treatment plant operate? Would there be sufficient water supply for the project? ..... and a hundred others.
The customers wanted answers. The banks wanted answers. The County officials wanted answers. The press wanted answers.
After about almost a year of study - and answering the questions the best we could - we were ready to "go public" with what we had found.
I remember vividly the day that I went to Charlotte County to make three public addresses in one day! I spoke to the County Comission. I had a meeting with the Rotonda Home Owners Association. And I had a press conference. I told them what we had found.
Much of the property could not be developed. But much of it could be. A consolidation program transfering customers to viable lots would be offered. Cash was available to do development work and a multi-million dollar development program would be initiated. Cape Cave land sales registrations were being reinstated. Customer service programs were put being in place. Plans for improving the Rotonda Utilities operations were being formulated. Sales brochures were being produced. Advertising programs were being designed and were about to be launched. Property would be released to Deltona's sales force and selling would begin again.
It was all very well received.
I remember - not quite as vividly - that after a day of very high tension and tough questioning that I was exhausted. We had planned to stay over for the night instead of flying home and someone had arranged for a private yacht to take us out to Cabbage Key, an old Florida fish camp now turned in to a restaurant and a few cottages. It was accessible only by boat. We celebrated a successful day on the veranda of the restaurant.
We managed Rotonda for the first three year contract period and restored its viability. We thought that Rotonda would be a permanent project for Deltonas future. The banks thought otherwise and the process of renewing our contract turned out to be a bidding contest with another developer who the lenders chose to go forward with.
There is no such thing as "good will" where banks are concerned.